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Accusations of Panel Selection Rigging

NASD & PIABA TANGLE OVER NLSS: Posted on the NASD Dispute Resolution and NASD Regulation WebSites is a Press Release, dated July 20, entitled “NASD Dispute Resolution Response to False PIABA Charges.”

The charges to which the Release and an accompanying letter from Richard Ketchum, NASD’s President, refer are contained in a Press Release of the same date issued by the Public Investors Arbitration Bar Association, entitled “NASD Caught Rigging Securities Arbitration Panels.”

In his letter, which is addressed to the individual members of PIABA’s Board, Mr. Ketchum issues a “demand that the PIABA Board retract its erroneous and groundless press release….” That PIABA Release, which attaches three communications between NASD-DR and PIABA that detail the focal issues in the controversy, attacks NASD’s Neutral List Selection System in alliterative and hyperbolic language as flawed by a “methodical manipulation” that favors veteran arbitrators (called “vociferous volunteers” in a 6/30 PIABA letter).

The observation of a bias was deemed a possibility requiring investigation, the Ketchum letter concedes, but premature publication of the charges was “simply irresponsible.” If PIABA had just waited until an extension date agreed to with PIABA President Mark Maddox, NASD complains, it would have had NASD’s final determination on this perceived bias in the system; i.e., that NLSS “does not choose arbitrators based on seniority when specific expertise is requested.”

[SEC Law.com Ed – Discussion regarding the “rigging” charges are on-going in the Securities Law Forum – http://www.seclaw.com/ubb/Forum1/HTML/000015.html]


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