Regulatory Analyst Settlement and Arbitration Impact, $1.4 billion

Expectations have been raised by the media, claimants’ counsel and other pundits that a flood of arbitration filings will follow the conclusion of the $1.4 billion regulatory settlement regarding analyst conflicts.


Expectations have been raised by media, Claimant’s counsel and other pundits that a flood of arbitration filings will follow the conclusion of the $1.4 billion regulatory settlement regarding analyst conflicts.

Acknowledging these predictions in an article appearing in the April 21 Wall Street Letter, NASD’s Linda D. Fienberg is quoted as stating that “’Lawyers for investors are waiting for the settlement to be completed. And they’re waiting to review the documents that will be public once the settlement is concluded.’” Filings are already up about 24% in the first quarter of 2003, versus 2002’s first quarter, and only about 100 of those 2,266 new filings (see SAA 03-15) involve complaints against analysts.

The huge settlement, to which ten major broker-dealers signed on, is the subject of a Joint Press Release issued on Monday (4/28) and has been widely covered in the mass media. The Release appears in full on the SEC’s WebSite,

In addition to the roadmap that the settlement descriptions provide for each broker-dealer and underwriting client, the regulators collected a mass of documentary evidence from the settling firms. These are the “documents” to which Ms. Fienberg alluded and, to the extent they are probative, arbitration practitioners can be expected to use these materials to formulate and present their cases.

Attached to a Press Release on the New York Attorney General’s WebSite (which is modestly sub-titled “Settlements Part of Spitzer-Inspired ‘Global Resolution’ of Wall Street Investigations,”) are Exhibit Volumes relating to the NYAG’s investigation of Citigroup, Jack Grubman, and Morgan Stanley ( The Release itself quotes Mr. Spitzer as saying that “evidence uncovered in these investigations is being placed in the public domain to empower individual investors to recover funds that may be owed to them.”) (SAC Ref. No. 03-17-01)

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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.

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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.