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Stalled at the SEC for years, a determination may be near

Stalled at the Commission for a couple of years, proposed amendments to Rule 10335 appear to be nearing some determination. One can never tell, of course, but the extension of time to which NASD Dispute Resolution agrees in this new filing is only for a very short period — until June 18, 2001.

Moreover, NASD makes changes to the Rule proposal, which is itself an overhaul of the original pilot for expedited arbitration, that are primarily SEC staff suggestions and merely appear to tweak the proposed amendments. Attention focuses on the temporary injunctive process, which the new Rule would leave to the courts, and tries to marry it more seamlessly with the arbitral process for damages and permanent injunctive relief. NASD cuts back on the requirement that lawyers with injunctive relief experience must constitute a majority of the arbitrator nomination list, evidently in response to fears by some commenters that such an expertise requirement would produce firm-biased panelists. The Director may now choose a Chairperson who is not such an individual and the number of “expert” nominees will be three of seven (industry panel) or four of nine (mixed panel). The Panel is given more power to allocate fees and expenses and its power to issue permanent injunctive relief and set new hearing for damages or other relief is clarified.

The particulars of the new proposal are detailed in a letter from the NASD to the SEC staff, dated May 17, 2001 and can be viewed at either the NASD Regulation or the NASD Dispute Resolution WebSites. (SAA Ref. No. 2001-23-01)


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