finra

FINRA



FOR RELEASE:
CONTACTS:
Thursday, May 4, 2006
Nancy Condon (202) 728-8379
Sarah Bohn (202) 728-8988

 


NASD Changes the Code of Arbitration Procedure, Enhances Online Training Program For Arbitrators

Washington, DC — NASD Dispute Resolution (NASD DR) announced today that it has filed with the Securities and Exchange Commission a number of improvements to its Code of Arbitration Procedure (Industry Code/Customer Code), including simplifying its language and reorganizing it in a more logical, user-friendly way. These and other revisions would codify best practices and provide more guidance to parties and arbitrators in the NASD DR forum.

 

NASD DR is proposing to divide the current Code into three separate codes: the Customer Code, the Industry Code, and the Mediation Code. Maintaining separate codes will eliminate confusion regarding which rules are applicable to which disputes. To make it easier to find specific rules, the Code will be organized to follow the sequential order of a typical arbitration. Once approved by the SEC, NASD DR will maintain electronic versions of each code on its Web site www.nasd.com and will make paper copies available upon request.

 

The proposed revisions would also require that NASD DR create and maintain a third roster of public arbitrators who are qualified to serve as chairpersons in cases involving investors.  The proposed revisions require arbitrators to have a specific amount of training and experience to qualify to serve as a chairperson in an arbitration case. In three-arbitrator cases, parties would receive three lists of potential arbitrators: a public list, a non-public list, and a public chair-qualified list. The parties would select the chairperson from the chair-qualified list in the same manner and at the same time that they select the other members of the panel.  In single-arbitrator cases, the arbitrator would be selected from a list of public chair-qualified arbitrators, unless the parties agree otherwise.  NASD DR also will establish chairperson lists for cases involving solely industry parties, such as disputes between firms.

 

In addition, the proposed revisions will refine the arbitrator selection process, giving parties lists of eight names from each of the three rosters (instead of the current ten names for both public arbitrator positions and five names for the non-public arbitrator position). Also, parties would be permitted to strike up to four names from each roster and rank the remaining names (instead of the current unlimited strikes).  This will make it much more likely that the parties' choices for arbitrators will remain on the panel.

 

"We continue to make significant improvements to our forum by ensuring that all parties have a comprehensive understanding of the arbitration process," said NASD DR President Linda Fienberg. "In addition to simplifying and reorganizing the Code, we are committed to further enhancing the NASD DR arbitrator education and training programs because the success of securities arbitration depends on the quality and caliber of arbitrators who hear and decide the disputes."

 

NASD DR recently expanded its already extensive arbitrator training program by adding two new courses to its series of online courses. Direct Communication and Understanding the Prehearing Process: Initial Prehearing Conference, provide practical guidance on how to address issues that arise during arbitrations. Each course takes approximately one hour to complete and is accessible 24 hours a day, seven days a week, for a full month after enrollment.

 

The Direct Communication course offers arbitrators a full overview of NASD DR's direct communication rule, which allows parties and arbitrators to communicate directly without first having to go through NASD DR. Understanding the Prehearing Stage: Initial Prehearing Conference course expands on one section of the chairperson-training course, and is an excellent resource for arbitrators who want a refresher on this topic.

 

In addition, NASD DR offers several other valuable online programs, including the Chairperson Training, Discovery: Abuse & Sanctions, Your Duty to Disclose, and Expungement. To register for the online courses, applicants are encouraged to complete an online enrollment form on NASD's Web site.

 

NASD DR is actively recruiting and training qualified persons - diverse in culture, profession, and background - to serve as neutral arbitrators over the course of the year. To maintain a strong balance of participants, NASD DR is recruiting candidates from numerous sectors, such as accountants, attorneys, investors and educators, as well as active securities professionals. For more information about upcoming recruitment conferences, contact NASD DR by calling (212) 858-4327 or by visiting www.nasd.com.

 

NASD DR is the largest securities dispute resolution forum in the world. NASD DR facilitates the efficient resolution of monetary, business, and employment disputes between investors, securities firms, and employees of securities firms by offering both arbitration and mediation services through a network of hearing locations across the United States. It currently maintains a roster of approximately 7,000 arbitrators and conducts arbitrations in 68 hearing locations in the United States and abroad.

 

NASD is the leading private-sector provider of financial regulatory services, dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services.  NASD touches virtually every aspect of the securities business - from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and member firms.  For more information, please visit our Web site at www.nasd.com.