Securities Arbitration Home Page

Introduction to Securities Arbitration
The ultimate primer on securities arbitration, authored by Mark J. Astarita, Esq., a New York securities attorney who has represented parties to securities arbitrations in virtually every major city for 20 years. An excellent introduction to the process.

Securities Arbitration Procedure Manual
By David Robbins, a comprehensive guide to securities arbitrations, with caselaw citations, discussion of strategy and theory, forms, statutes and much more.

Securities Regulation in a Nutshell - This book summarizes the essential background and current status of each major area, while keeping details and citations to a minimum. It includes references to the relevant statutes, SEC rules and releases, and other governmental materials, as well as to "leading cases."

Commentary

Comment Period For Motion To Dismiss Ban Is April 10
As everyone now knows, FINRA has a rule proposal pending to eliminate motions to dismiss in arbitrations. The comment period ends on Thursday, and very few comments have been submitted. The ones that have been made are almost uniformly in favor of the rule.
FINRA's proposal will effectively eliminate motions to dismiss in arbitrations prior to the presentation of Claimant's case. While those motions are rarely granted, some are granted, and motions made during the course of discovery are also granted. Such motions are a valid part of the arbitration process, and serve to limit the scope of a proceeding, or the length of a hearing.

NASDR Notices to Members

08-20 FINRA Requests Comments on Proposed Changes to Forms U4 and U5
FINRA requests comment on proposed changes to Forms U4 and U5. The proposed changes, which were developed by a working group composed of regulators and industry participants (the Working Group), are intended to benefit regulators, investors and the industry. Proposed revisions, among other things, would require firms to report, as customer complaints, allegations of sales practice violations made in arbitration claims and civil lawsuits against registered persons who are not named as parties in those proceedings. The proposals also include revisions to Forms U4 and U5 designed to ease, clarify or facilitate reporting requirements and other technical and/or conforming changes

News Items

FINRA Hearing Panel Dismisses 2004 Sales Practices Complaint Against H&R Block Financial Advisors
In a decision that is surely causing concern at FINRA, a FINRA Hearing Panel dismissed a complaint against H&R Block Financial Advisors alleging sales practices and supervisory violations relating to sales of Enron Corporation bonds during the one-month period immediately preceding Enron's filing for bankruptcy protection on Dec. 2, 2001.

The panel ruled that FINRA's Department of Enforcement failed to show by a preponderance of evidence that H&R Block registered representatives misrepresented or omitted material facts in connection with sales of Enron bonds, or that the firm failed to implement adequate supervisory systems and procedures. Specifically, the Panel "found no evidence" that the firm "engaged in other wrongful conduct."

A FINRA hearing panel finds "no evidence" to support FINRA charges against a BD? While this raises a number of concerns regarding the quality of the investigative process at FINRA and its decision making process in commencing litigation, the proceeding was undoubtedly a significant expense for the respondents, as the hearings consumed 24 days of testimony.

We are seeing an increasing number of hearing panels dismissing all or parts of enforcement cases. FINRA needs to examine the quality of its investigative procedures, and to re-examine its perception of brokers and brokerage firms, which may be clouding its collective judgment in commencing cases where there is no evidence of any wrongdoing.

The panel issued a detailed, 54- page decision.

BlackRock bails out its auction-rate holders
Good news for holders of Auction rate securities. Joining Nuveen and Eaton Vance, BlackRock, the second-largest manager of closed-end funds in the U.S., said that it would restructure $1.9 billion of ARPs issued by both taxable and tax-exempt closed-end funds.

That means that the holders of the ARS will not have a loss on their investment. Of couse, this all assumes that Blackrock follows through. Reports say that it has obtained 1.9 billion in financing for the bail out, but Blackrock has over 9 billion dollars in ars in its mu

Ex-Brookstreet brokers file $36M claim
According to InvestmentNews, five brokers at the center of the collapse of Brookstreet Securities Corp. have filed a $36 million arbitration complaint against Brookstreet’s former clearing firm, National Financial Services LLC, alleging that hundreds of millions of dollars that clients lost in highly leveraged collateralized mortgage obligations were directly attributable to National Financial Services’wrongful conduct.

Related Sites

Subprime-related lawsuits clogging courts
Cases mounting quickly, may eventually surpass number of suits filed in S&L scandal; on average, two suits filed every day

Introductory Material

Introduction to the Federal Securities Laws
It all starts here. A primer on the federal securities laws.

Typical Customer Arbitration Disputes
An overview of the claims which are typically brought by retail customers against their stock brokers.

Churned or Traded?
An examination of the elements of a churning claim, and what makes a churned account different from a traded account.

Judging Suitability
A broker's recommendations to a customer must be suitable for that customer's investment goals and experience. What does that mean in the real world, and how is suitability determined?

Article Archives

Article Archives
Collection of all of the arbitration articles and commentary from the site, arranged in chronological order. You can also search the site for relevant commentary

Discussion Forums

In the Arbitration Forum, attorneys, investment bankers and corporate executives discuss financing issues. Go directly to the Arbitration Forum, or search all of the forums for the topics of interest to you.

How To Guides

How to Start an Arbitration - from the NASD, a collection of documents relating to the arbitration process, with links to the necessary forms.

How to Start a Mediation - the NASD also sponsors a mediation program.

Arbitration Codes and Statutes

Federal Arbitration Act
The Federal Statute governing arbitration proceedings

NASD Code of Arbitration Procedure
From the NASD web site, the full text of the Code.

NYSE Arbitration Rules
The rules and procedures used when conducting an arbitration at the New York Stock Exchange.

Commercial Arbitration Rules From the American Arbitration Association, the rules, the procedures and more.

Uniform Arbitration Act
This is the model Act, used as the basis for the drafting of state statutes relating to arbitration.

Introduction to NASD Mediation
The NASD's introduction to its mediation program, an alternate means of resolving disputes with securities brokers.

Arbitration Related Forms

NASD Arbitration Form Guide - The NASD has put all of its arbitration related forms, including uniform submission agreements and the claim information sheet, in one PDF file, which also contains helpful informationr regarding the filing of an arbitration claim.

Scheduling Order (PDF format 86 KB)
The panel Chairperson has the responsibility to use the Scheduling Order to record the agreements reached during the Initial Prehearing Conference. The Chairperson should submit the Scheduling Order to NASD Dispute Resolution within 48 hours of the conference by electronic mail or facsimile transmission.

Arbitrator's Script (PDF format 137 KB)
The Arbitrator's Script sets forth the procedures for the Initial Prehearing Conference. In the discretion of the panel, these procedures may be varied to allow all parties a full and fair opportunity to present their respective positions.

NASAD Form of Order on Request for Permanent Injunction (PDF)
The Order on Request for Permanent Injunction is completed by arbitrators to record the arbitrators' decision on a party's request for permanent injunction in intra-industry cases.

NASD Form of Order of Production (PDF)
For use in an NASD arbitration, this form is used to compel a party or a member firm, or an associated person to produce documents in an NASD arbitration.

NASD Form of Order of Appearance (PDF)
For use in NASD Arbitrations, this form is used to have an NASD member, or associated person appear and testify an an arbitration hearing.

NASD Form of Arbitration Subpoena (PDF)
For use in NASD Arbitrations, to unregistered third parties.

NASD's Oath Of Arbitrator (PDF)
Review the Oath of Arbitrator that must be taken by all NASD-approved arbitrators. The oath must be executed by NASD arbitrators for each case on which they serve.

Arbitrator Update Form (PDF)
If you are already an arbitrator on the NASD roster, use this online form to update NASD Dispute Resolution of any new or revised information about your status.

Arbitrator Application (PDF)
Become an arbitrator at the NASD! They always need public arbitrators, and actually need industry arbitrators in parts of the country. This form starts the process

Respondent(s) Uniform Submission Agreement (PDF_
The NASD's Uniform Submission Agreement for use by Respondents in NASD arbitrations

Claimant(s) Uniform Submission Agreement (PDF)
The NASD's Uniform Submission Agreement for use by Claimants in NASD Arbitrations

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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.

SECLaw.com was created by Mark J. Astarita, Esq., a securities attorney and partner in the law firm of Beam & Astarita, LLC, who represents financial professionals in a wide variety of matters. Mr. Astarita can be contacted by email at astarita@beamlaw.com.

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