Since no one ever agrees, let’s make the time period 5 days – NASD Staff
Under a proposal submitted to the SEC on March 3, NASD will allow only 5 days for parties to agree on the selection of a chairperson, as opposed to the 15-day period in Rule 10308(c)(5). The change is necessitated, the NASD states in its filing of SR-NASD-2004-039, in order to speed up the selection process and allow the Initial Prehearing Conference (IPHC) to be scheduled more expeditiously. 80% of the time, NASD argues, the 15-day period is wasted, because the parties cannot or do not make a mutual selection and the Director must make the appointment.
Under the proposed rule, NASD would only have to wait 5 days before making selection and, where the parties notify staff that they are negotiating to select a chairperson and need an extension of time, staff will grant additional time. (SAC Ed: We might quarrel with the stated premise for the change, in that the arbitrator selection process is already complete when the chair selection option kicks in, plus (at least in the Northeast Region) the IPHC is also scheduled at the time the arbitrator appointments are announced to the parties. Arguably, the staff could schedule the IPHC ten days sooner than they have in the past, but that is currently a matter within administrative discretion. This change may not produce the desired reduction in case turnaround time. Ultimately, though, it all matters little, as the option to select the chairperson will be taken out of the parties hands altogether under the new Customer Code (see Proposed Rule 12406). This filing does not mention the Proposed Code filing, but it would substitute a qualified chairpersons list for part of the Public Arbitrator list of nominees that parties now receive and allow the Director to select the Chair from the unstricken candidates. That NASD-DR has filed the proposal at this juncture may signify that a long wait is now anticipated before the SEC will act on the Proposed Customer Code.) (SAC Ref. No. 04-10-01)
Copyright 2004 Securities Arbitration Commentator, Inc. P.O. Box 112, Maplewood, NJ 07040; t: 973-761-5880 f: 973-761-1504. Materials denoted with a SAC Reference No. (e.g. SAC Ref. No. 99-01-001) are on hand at SAC and may be obtained by calling the Securities Arbitration Commentator, or by email to email@example.com. The Securities Arbitration Commentator is the leading publication for securities arbitration news and information, and maintains the most complete database of arbitration awards availalble anywhere. For more information regarding their services, visit their website at www.sacarbitration.com
Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial advisor before acting upon the information contained in this article.
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 - SECLaw.com, 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.