Notice to Members 98-56

SEC Approves Rule Change Regarding Arbitration of Statutory Employment Disputes

Effective January 1, 1999

On June 22, 1998, the Securities and Exchange Commission (SEC) approved an amendment to National Association of Securities Dealers, Inc. (NASD®) Rule 10201 to modify the current requirement that associated persons arbitrate all disputes arising out of their employment or termination of employment with a member broker/dealer. The amended rule provides that associated persons no longer will be required, solely by virtue of their association or their registration with the NASD, to arbitrate claims of statutory employment discrimination. Associated persons still will be required to arbitrate other employment-related claims, as well as any business-related claims involving investors or other persons. The amended rule will be effective on January 1, 1999, for claims filed on or after that date. The text of the amended rule is attached.