News Release

NASD Regulation Marks First-Year Anniversary of Mediation in the Securities Industry

Washington, DC—NASD Regulation, Inc., today released its mediation program first-year statistics. More than 85 percent of the claims submitted to mediation settled. The number of cases entering mediation as an alternative to arbitration in the last six months is triple the number for the first six months of operations. Claims in the initial year have ranged from $10,000 to $3 million. Furthermore, 211 matters have completed mediation and parties in over 100 more cases have agreed to mediate. On average, cases are concluding within two months of the parties' agreement to mediate. The figures point to a growing trend toward the use of mediation to resolve securities disputes. Though mediation still accounts for a small portion of the over 6,000 cases per year resolved through arbitration, it has increased significantly since its inception. "Initially, cases came into mediation from arbitration. Now we are seeing more cases come directly into mediation," said Kenneth Andrichik, Director of Mediation for NASD Regulation.

The NASD Mediation Rules were approved by the Securities and Exchange Commission on August 1, 1995. Mediation, a form of dispute resolution, offers investors an alternative to arbitration. Unlike arbitration, mediation is a non- binding process that must be agreed upon by both parties. Resolution is reached when there is agreement between both parties.

Mediation typically begins with a joint session in which each party makes an opening statement. Once the parties finish their joint session, the mediator usually breaks them into separate, private meetings, called caucus sessions. Strict confidentiality is ensured as parties share their issues and interests and explore common ground. The mediator then helps facilitate a settlement amenable to both parties. If a settlement is not reached, the claim can then be taken to arbitration.