NASD Arbitration Statistics March 2003 – From the Securities Law Home Page


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Volume at the NASD Arbitration forum continues to climb, recording in the first quarter 24% more new cases than the comparable period in 2002

The 2,266 new filings through March 2003 suggest, on an annualized basis, that 9,000 or more claims could be submitted for arbitration by the end of 2003. That, of course, depends upon whether the surge that has overtaken arbitration since 2000 will hasten or abate. Many think that a number of Claimants have yet to file and are awaiting an anticipated global settlement between regulators and brokerage firms.

Also, each month, taken alone, in this first quarter has set a record, relative to monthly volume in previous years. Finally, March 2003’s volume nearly broke the 800 level and at 797 represents the largest filing month among the three record months.

NASD’s Dispute Resolution President Linda Fienberg reported at the SIA’s Compliance & Legal Division Conference in Orlando last week that the incoming submissions contain some big cases. For instance, one attorney filed 70 cases relating to a single stock and one broker-dealer. A single filing was also made on behalf of more than 100 investors. Finally, the first $1 billion claim was recorded at the forum.

NASD has staffed up to meet the new demand, adding some 14 new slots (185 permanent staff) and temporary help as well. Case close-outs number 1,726 for the first quarter, which stands 26% ahead of last year’s first quarter and average turnaround time, while 8% longer than last year at 14.1 months, stabilized this month and even improved a bit.

Despite the steady flow of new arbitration cases, mediation volume has slackened 30% year-to-date (vs. 2002); moreover, average turnaround time is approaching five months, up 35% from last year. However, the percentage of cases settled by mediation continues to run at about 12-13% of the total close-outs and resolutions are being achieved in a surprisingly high 87% of cases mediated.

Dispositions by Award in the customer area are reflecting a 57% win rate for customers and the $62 million in aggregate that has been awarded to customers during the last three months suggests that the size of the claims being arbitrated have reached new levels. Are the claims getting better or are arbitrator attitudes shifting? One indicator may perhaps be seen in the small claims submissions, where lone arbitrators decide cases on the basis of documentary evidence and written arguments. The percentage of customer “wins” in this category has risen to 64% and, in March 2003, 20 of the 28 newly decided simplified Awards contained monetary awards to customers. The “win” rate for these cases in 2002 was 50%.



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