Notice to Members 02-13

SEC Approves Permanent Injunctive Relief Rule

The Securities and Exchange Commission (SEC or Commission) has approved amendments to Rule 10335 of the NASD Code of Arbitration Procedure (Code) governing injunctive relief in intra-industry disputes. The amendments, which substantially modify the existing pilot rule and make it a permanent part of the Code, will apply to all claims filed on or after March 25, 2002.

Under the permanent rule, temporary injunctive relief is not available in arbitration. Parties in intra-industry cases may seek temporary injunctive relief in a court of competent jurisdiction. If a court orders temporary injunctive relief, the permanent rule requires an expedited hearing in arbitration on the underlying dispute before a panel of three arbitrators. To expedite the hearing on the merits when a court has granted temporary injunctive relief, the permanent rule provides a shortened time frame for arbitrator selection. The rule also clarifies the impact of a pending court order on the underlying arbitration, and provides guidance regarding the substantive legal standard applicable to requests for permanent injunctive relief.

The SEC also approved amendments to Rule 10205(h) to conform the injunctive relief fee provision to the permanent rule.

Questions regarding this Notice may be directed to Laura Gansler, Counsel, NASD Dispute Resolution, Inc., at (202) 728-8275.