Investors Question NASD Arbitration Process
Investor's Business Daily (08/01/00) Vol. 22, No. 49 p.B3; Hoover, Ken

Attorneys hired to represent investors in arbitration disputes claim the computer operated by the National Association of Securities Dealers (NASD) is programmed to favor brokerages. Lawyers say their suspicions were raised after viewing a demonstration of the computer that helps select arbiters. The system is supposed to randomly select names from a pool of prospective mediators, and once an arbitrator has been used, place his/her name at the bottom of the list. But attorneys claim that did not occur during the demonstration. Witnesses purport that some of the names were appearing more than once. Lawyers remember noticing other irregularities as well. For example, Mark Maddox with the Public Investors Arbitration Bar Association said the NASD computer technician informed lawyers that the computer would not provide the names of experts if asked, but would rather offer names by seniority. Given that the most experienced panelists tend to lean toward the industry in arbitration cases, investors' lawyers have concluded the system is rigged against their clients.

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