NASD NYSE Arbitration Statistics May 2001


The surge in filings at NASD Dispute Resolution continued into May, as a record 660 new cases were added to its docket. That number, 660, is the largest monthly tally in recent history and probably ever!

In March 1999, there was a sudden, episodic rise in filings, 647 for the month, as investors rushed to file before big fee hikes took effect. Now, with those fee hikes in place, and despite fairly significant cost differences between NASD and NYSE, Claimants’ choice of NASD-DR for arbitrating their securities disputes has caused a 27% rise in new cases this year.

Close-outs are on track with last year’s healthy pace, but, because of the filing surge, there are about 650 more new filings than closed cases for the first five months of 2001 (2,801 vs. 2,141).

Programs like the SICA Non-SRO Pilot Project or the Single Arbitrator Pilot are not assisting greatly. Of 110 cases that have been deemed eligible for transfer to JAMS or AAA, only 4 have entered the Non-SRO Program. Four is also the number of cases agreeing to try the Single Arbitrator Pilot over the past year, even though some 359 cases met the criteria.Even mediation is down, about 11%, as 430 cases have entered mediation this year, versus 483 “Cases in Agreement” for the first five months of 2000. The success rate is off, too, dropping to 75% from a high of 85% in 1999. Mediated settlements account for only about 17% of the settled cases thus far in 2001, when they comprised 24% of the settlements in 2000.

The matters in controversy cover the spectrum, with mini-surges in the online trading and margin call areas (about 12% of the cases served involve these two areas of controversy, versus about 9% in 2000). Mutual funds were up significantly last year, as a product in dispute, and will be again this year. Options disputes, too, are on the rise.

Will the quality of claims be getting better? Well, the “win” rate for customers is running at 55% this year, versus 53% for 2000, but (a) that is a small difference, and (b) it may be due to an increasing reluctance to settle at the brokerage houses – a cyclical tendency to bullheadedness in bear markets that permits more meritorious claims to reach the arbitrators. (SAC Ed: The Non-SRO Program may have been ill-starred, but the seeming failure of the single arbitrator concept puzzles us. It makes one wonder about the ability of counsel to agree on anything or whether cost reduction is a serious priority at all.)

Securities Attorney at Sallah Astarita & Cox | 212-509-6544 | | Website | + posts

Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.

He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page -, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.