Neutral Corner - December 2005

Year-End Message to Arbitrators

NASD Dispute Resolution (NASD DR) strives to be the preeminent provider of securities-related dispute resolution services. Such a goal is only possible when talented, dedicated arbitrators and mediators aid in the process. Each of you is an integral part of the dispute resolution process at NASD DR, and we want to thank you for your tremendous service this year. We would not be the forum of choice without the efforts of the arbitrators and mediators on our roster, and we value the commitment and skill you bring to the process.

Dispute Resolution News

Case Filings

Arbitration case filings from January 1 through November 30, 2005 reflect a 28 percent decrease compared to case filings during the same eleven-month period in 2004 (from 7,581 in 2004 to 5,480 in 2005). At the same time, the number of cases closed increased by one percent compared to 2004 (from 8,329 in 2004 to 8,393 in 2005).

The overall turnaround time to process an arbitration case (hearing and simplified decisions) from January 1 through November 30, 2005 decreased by five percent compared to the same time period in 2004 (15 months in 2004 to 14.2 months in 2005).

Mediation Month Results

In 2005, the number of cases that agreed to mediate surpassed the total for the same time period in 2004 by four percent—due in part to a successful 2005 Mediation Settlement Month in October. During Mediation Settlement Month, NASD DR offers reduced mediation fees and promotes the benefits of mediation. Since Settlement Month rates often flow into November, the number of mediation cases for 2005 may continue to grow. We will monitor this information and provide a complete summary at a later date.

For parties in areas affected by recent natural disasters, we extended the Mediation Settlement Month discount through the end of the year. For further information, please visit NASD's Web site.

Subscription for Monthly Dispute Resolution Updates

Please be sure to register to receive free, online monthly arbitration and mediation updates. NASD Dispute Resolution will automatically send you information and news, including important dispute resolution information about training opportunities, recruitment needs, new speeches, news releases, announcements, publications, including The Neutral Corner, and new features about our Web site.

You may register to receive updates at NASD's Web site.

Latest in Arbitrator Training

Training is a vital component to maintaining a quality arbitrator roster. In recent years, NASD DR has expanded its online training programs for arbitrators, focusing on new rules, procedures, and specialized guidance on how to conduct fair and efficient hearings.

Currently, NASD DR offers six online training courses. With the exception of the Expungement mini-course, all of our online courses are voluntary. However, arbitrators are strongly encouraged to take advantage of all of NASD DR's training programs. Participants may enroll in a course at any time, after which they have 30 days to complete the program. Arbitrators who successfully complete the online training programs will have this noted on their Arbitrator Disclosure Reports, which NASD shares with the parties.

New Online Courses

In December of 2005, NASD DR added two new online mini-courses: Direct Communication and Understanding the Prehearing Process: Initial Prehearing Conference.

Direct Communication (Mini-Course)

This course provides a full overview of NASD's direct communication rule. The course discusses the benefits of proceeding under the direct communication rule; outlines the types of communication that are not permitted under the rules; and provides practical guidance in applying the rule in an arbitration.

Understanding the Prehearing Stage: Initial Prehearing Conference (Mini-Course)

This mini-course expands on one section of the chairperson training course, and is an excellent resource for arbitrators who missed that program or just want a refresher on this topic. This course advises arbitrators on how to manage the Initial Prehearing Conference (IPHC). The course assists arbitrators in organizing the IPHC; keeping the parties focused on the tasks at hand, of which scheduling hearing dates is primary; and providing practical guidance on other preliminary issues that may arise during the IPHC. 

Each course takes approximately one hour to complete, and tuition is $25.

Other Online Courses 

In addition to the new mini-courses mentioned above, we continue to offer several other valuable online programs. Like the new mini-courses, these courses offer arbitrators practical guidance on how to address issues that frequently come up during arbitrations. The following are brief summaries of these training programs:

Chairperson Training

This course instructs arbitrators on the additional responsibilities of assuming the challenging role of the chairperson, such as managing the discovery process and setting the tone and maintaining decorum during the hearing. The course takes approximately nine hours to complete and may be completed in several sessions — at the trainee's convenience. The course concludes with an examination (score of 80 percent or greater is required to pass), and tuition is $100.

Discovery, Abuse & Sanctions (Mini-Course)

This course focuses on the respective duties of arbitrators and parties in the discovery process. The course explains NASD's Discovery Guide; discusses the need for Orders of Confidentiality; guides arbitrators to recognize and address discovery abuses; and reviews the array of possible sanctions that arbitrators may impose for discovery violations. The course takes approximately one hour to complete, and tuition is $25. 

Your Duty to Disclose (Mini-Course)

This course focuses on arbitrators' obligations to disclose information to NASD DR, parties and co-arbitrators. Specifically, the course describes NASD DR's disclosure requirements; explains the necessity for complete disclosure and its importance to the neutrality of the process; instructs arbitrators on how to correctly make a disclosure; and reinforces the need for arbitrators to meet their continuing disclosure obligations. The course takes approximately one hour to complete, and tuition is $25.

Expungement (Mini-Course)

This mandatory course provides an overview of the expungement process.  Specifically, the course explains the role of the Central Registration Depository (CRD); gives an in-depth review of NASD's Rule 2130; and discusses the specific findings arbitrators must make in order for NASD to waive its right to oppose the expungement request in court. The course takes approximately one hour to complete.  Arbitrators are not charged tuition for the course.


To register for any of the courses, please complete the online enrollment form on NASD's Web site. You may also view a list of basic arbitrator training schedules for 2006 on our Web site.

Arbitrator Tip

In the October 2005 issue of The Neutral Corner, we published an article on disciplinary referrals, which are prompted by arbitration panels. In the article, a case example was presented in which the panel was unanimous in its decision to refer the member firm for disciplinary action. There may be occasions, however, when the majority of the panel does not agree. In this issue, we clarify our policy on disciplinary referrals and provide guidance on how to proceed when only one arbitrator wishes to initiate a referral.

Under NASD Rule 10105, an arbitrator may refer a matter for disciplinary investigation if he or she has reason to believe that a party has violated NASD rules or federal securities laws. The rule does not require the majority consent of the panel; a single arbitrator may initiate a disciplinary referral. Although a majority of the panel is not required, arbitrators are encouraged to discuss the matter with their fellow panelists before initiating a referral.

The process to initiate a disciplinary referral is the same whether a single arbitrator or an entire panel prompts an investigation. An arbitrator would complete the Disciplinary Referral form located under general information and reference in the Dispute Resolution section of NASD's Web site, or obtain a form from staff. The basis for the award in the arbitration case should never be disclosed in the form; only those facts and circumstances that underlie the decision to make the referral for disciplinary investigation should be included. 

SEC Approvals

Arbitration Fees Applicable to Certain Statutory Employment Discrimination Claims

On October 24, 2005, the SEC approved a rule proposal to revise the fees in statutory employment discrimination cases. The rule change, SR-NASD-2005-046, provides that for any statutory employment discrimination claim that is subject to a predispute arbitration agreement, the associated person will pay a filing fee of no more than $200. The member will pay any remaining arbitration fees. Arbitrators may still assess certain costs involving adjournments, discovery, and transcription of proceedings to the associated person. For additional information on the approval order amending the fees applicable to statutory employment discrimination claims, please visit NASD's Web site.

This rule will become effective on January 17, 2006. A Notice to Members was issued on December 21, 2005.

Reorganization and Revision of NASD Mediation Rules

On October 31, 2005, the SEC approved a rule change to reorganize NASD DR's mediation rules. The proposed rule change is part of a comprehensive plan to reorganize NASD's Code of Arbitration Procedure (Code) into three separate procedural codes: the NASD Code of Arbitration Procedure for Customer Disputes (Customer Code), the NASD Code of Arbitration Procedure for Industry Disputes (Industry Code), and the NASD Code of Mediation Procedure (Mediation Code). The rule change, SR-NASD-2004-013, reorganizes and simplifies the language of the Mediation Code. For additional information on the approval order implementing the Mediation Code, please visit NASD's Web site.

This rule change will become effective on January 30, 2006 and will apply to any claims filed on or after January 30, 2006. A Notice to Members was issued on December 30, 2005.

Regional Updates

Northeast Regional Update

During the next three months, the Northeast Regional Office will conduct in-person Basic Panel Member Training programs in these cities on the following dates:

  • New York, New York - February 15, 2006
  • Hartford, Connecticut - March 23, 2006

If you are interested in attending a Basic Panel Member Training program in any of these cities, please contact Cheree White at (212) 858-4063, or by email.

Mid-Atlantic Regional Update

On December 12, 2005, the Mid-Atlantic Regional Office implemented a new business process to administer arbitration cases. Under the new business model, the staff is organized in functional groups designed to provide greater flexibility and improved customer service. If you have any questions about the new business process, please contact Shari L. Sturm, Regional Director of the Mid-Atlantic Regional Office, at (202) 728-8828.

During the next three months, the Mid-Atlantic Regional Office will conduct the following in-person Basic Panel Member Training program:

  • Pittsburgh, Pennsylvania - March 9, 2006

If you are interested in attending a Basic Panel Member Training program, please contact Karen Carter at (202) 728-8327, or by email.

Southeast Regional Update

During the next three months, the Southeast Regional Office will conduct in-person Basic Panel Member Training programs in these cities on the following dates:

  • Boca Raton, Florida - February 15, 2006
  • Tampa, Florida - March 15, 2006

If you are interested in attending the Basic Panel Member Training program, please contact Lanette Cajigas at (561) 447-4911, or by email.

Midwest Regional Update

Continuing NASD DR's effort to diversify its roster of arbitrators, the Midwest Regional Office participated in a recruitment function at Sanchez Daniel & Hoffman, LLP on October 25, 2005. Sanchez Daniel & Hoffman, LLP is the second largest minority-owned law firm in the United States.

The Midwest Regional Office also recruited arbitrators at the Nebraska State Bar Association Meeting in Lincoln, Nebraska held on November 9, 2005.

During the next three months, the Midwest Regional Office will conduct in-person Basic Panel Member Training programs in these cities on the following dates:

  • St. Louis, Missouri - February 22, 2006
  • Houston, Texas - March 8, 2006
  • Louisville, Kentucky - March 22, 2006

If you are interested in attending a Basic Panel Member Training program in any of these cities, please contact Deborah Woods at (312) 899-4431, or by email.

West Regional Update

In an effort to recruit arbitrators, the West Regional Office attended the Fall Forum of the Utah State Bar in Salt Lake City held on November 11, 2005.

On November 15, 2005, NASD DR conducted a focus group meeting in Boise, Idaho. The agenda included an overview of NASD DR programs, updates on recent events, arbitrator and mediator training, rule changes, and features of our Web site. NASD DR was represented by Linda D. Fienberg, President of Dispute Resolution; Judith Hale Norris, Vice President and Director of the West Region; and Kenneth L. Andrichik, Sr. Vice President and Director of Mediation.

In March 2005, the West Region opened three new hearing locations: Boise, Idaho; Cheyenne, Wyoming; and Helena, Montana. NASD DR is actively recruiting arbitrators for these three locations. If you or someone you know is interested in serving as an arbitrator or mediator in Boise, Cheyenne or Helena, please contact NASD DR's Recruitment Supervisor, Neil McCoy, at (212) 858-4283 or by email.

During the next three months, the West Regional Office will conduct in-person Basic Panel Member Training programs in these cities on the following dates:

  • San Francisco, California - February 7, 2006
  • Phoenix, Arizona - March 7, 2006

If you are interested in attending a Basic Panel Member Training program, please contact Tiffany Hansmann at (213) 613-2684, or by email.

Question and Answer: Non-Lawyer Representation in Florida

Question:  May a non-lawyer represent an investor in an arbitration proceeding in the state of Florida?

Answer: A non-lawyer cannot represent an investor in an arbitration proceeding in Florida unless the non-lawyer is not receiving any compensation for his or her services.

On July 3, 1997, the Florida Supreme Court enjoined non-lawyers from collecting fees for representing investors in securities arbitrations, ruling that such representation is an unauthorized practice of law. In response to the court's injunction, NASD DR requires that non-lawyers representing investors in arbitration proceedings in Florida affirm, in writing, that they are not receiving compensation in connection with the representation. If they fail to do so, NASD DR will consider the investor to be pro se—that is, representing him or herself— and will not correspond or communicate with the non-lawyer representative regarding any aspect of the arbitration proceeding.  

The Florida Supreme Court's injunction does not apply to attorneys licensed in the state of Florida or in any other jurisdiction. The injunction applies only to non-lawyers representing investors in arbitration proceedings. 

Message from the Editor

In addition to comments, feedback, and questions regarding the material presented in this publication or other arbitration and mediation issues, The Neutral Corner invites readers to submit articles on important issues of law and procedure relating to mediation, arbitration, or other alternative dispute resolution processes. We reserve the right to determine which articles to publish.

Please email or send your articles to:

Jisook Lee, Editor
The Neutral Corner
NASD Dispute Resolution
One Liberty Plaza
165 Broadway, 27th Floor
New York, New York 10006


Linda D. Fienberg
NASD Dispute Resolution

George H. Friedman
Executive Vice President &
Director of Arbitration
NASD Dispute Resolution

Kenneth L. Andrichik
Senior Vice President &
Director of Mediation & Business

Jean I. Feeney
Vice President & Chief Counsel

Dorothy Popp
Vice President &
Director of Operations

Richard W. Berry
Vice President &
Director of Case Administration

Barbara L. Brady
Associate Vice President &
Director of Neutral Management

Elizabeth R. Clancy
Vice President & Regional Director,
Northeast Region

Judith Hale Norris
Vice President & Regional Director,
West Region

Rose Schindler
Associate Vice President &
Regional Director, Southeast Region

Shari Sturm
Regional Director,
Mid-Atlantic Region

Scott Carfello
Regional Director,
Midwest Region

Jisook Lee
Associate Director of Neutral

Management and Editor of
The Neutral Corner

Editorial Board

Nicole Haynes - Northeast Region
Marya Santor - Mid-Atlantic Region
Elaine Kohn - West Region

Lisa Lasher - Southeast Region
Mignon McLemore - Office of Chief Counsel
Patrick Walsh - Midwest Region

NASD Dispute Resolution Offices

Northeast Region
One Liberty Plaza
165 Broadway
27th Floor
New York, NY 10006
Tele: (212) 858-4400
Fax: (212) 858-4429

Mid-Atlantic Region
1735 K Street, NW
Washington, DC 20006
Tele: (202) 728-8958
Fax: (202) 728-6952

Southeast Region
Boca Center Tower 1
5200 Town Center Circle
Second Floor
Boca Raton, FL 33486
Tele: (561) 416-0277
Fax: (561) 416-2267
West Region
300 S. Grand Avenue
Suite 900
Los Angeles, CA 90071
Tele: (213) 613-2680
Fax: (213) 613-2677

Midwest Region
10 S. LaSalle Street
Suite 1110
Chicago, IL 60603-1002
Tele: (312) 899-4440
Fax: (312) 236-9239