[Federal Register Volume 60, Number 25 (Tuesday, February 7, 1995)]
[Notices]
[Pages 7241-7245]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2972]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35314; File No. SR-NASD-94-10]
Self-Regulatory Organizations; Order Approving Proposed Rule
Change by National Association of Securities Dealers, Inc. Relating to
Procedures for Large and Complex Arbitration Cases
February 1, 1995.
On January 31, 1995, the National Association of Securities
Dealers, Inc. (``NASD'' or ``Association'') filed with the Securities
and Exchange Commission (``SEC'' or ``Commission'')\1\ a proposed rule
change pursuant to Section 19(b)(1) of the Securities Exchange Act of
1934 (``Act'')\2\, and Rule 19b-4 thereunder.\3\ The rule change amends
the Code of Arbitration Procedure (``Code'')\4\ by amending Part III,
Sections 43\5\ and 44\6\ and adding new Section 46 to provide
procedures for large and complex arbitration cases as a one year pilot
program.
\1\The NASD initially submitted the proposed rule change on
February 15, 1994. Amendment No. 1, submitted on October 12, 1994,
clarified various aspects of the proposed rule change, altered the
manner in which arbitrators are selected to a panel and altered the
disclosures required with respect to unsuccessful settlement
discussions. Amendment No. 2, submitted on November 18, 1994,
amended proposed Section 46(g) to clarify that arbitrators may, at
their own initiative, issue an award accompanied by a statement of
reasons or basis of award and that parties may specifically agree to
require arbitrators to issue a statement of reasons when they issue
an award. Amendment No. 3, submitted on December 12, 1994, and
Amendment No. 4 were minor technical amendments. See Letter from
Suzanne E. Rothwell, Associate General Counsel, NASD, to Mark
Barracca, Branch Chief, Over-the-Counter Regulation, SEC (December
9, 1994) (available in Commission's Public Reference Room); Letter
from Suzanne E. Rothwell, Associate General Counsel, NASD, to Mark
Barracca, Branch Chief, Over-the-Counter Regulation, SEC (January
31, 1994) (available in Commission's Public Reference Room).
\2\15 U.S.C. 78s(b)(1) (1988).
\3\17 CFR 240.19b-4.
\4\NASD Manual, Code of Arbitration Procedure, (CCH) 3701 et.
seq.
\5\NASD Manual, Code of Arbitration Procedure, Part III, Sec. 43
(CCH) 3743.
\6\NASD Manual, Code of Arbitration Procedure, Part III, Sec. 44
(CCH) 3744.
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Notice of the proposed rule change, together with the substance of
the proposal, was provided by issuance of a Commission release
(Securities Exchange Act Release No. 34998, Nov. 22, 1994) and by
publication in the Federal Register (59 FR 61010, Nov. 29, 1994). Two
comment letters were received.\7\ This order approves the proposed rule
change.
\7\See letter from Cliff Palefsky, Esq., Chairman, Securities
Industry Arbitration Committee, National Employment Lawyers
Association (``NELA''), to Jonathan G. Katz, Secretary, SEC, dated
December 12, 1994 (``NELA Letter''); letter from Seth E. Lipner,
Esq., Deutsch & Lipner, to Jonathan G. Katz, Secretary, SEC, dated
December 22, 1994 (``Lipner Letter'').
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I. Background
The Code governs arbitration of any dispute arising out of or in
connection with the business of any NASD member, or arising out of the
employment or termination of employment of associated persons with a
member, other than disputes involving the insurance business of any
member which is also an insurance company, if the dispute is: (1)
Between or among members; (2) between or among members and associated
persons; (3) between or among members of associated persons and public
customers, or others; or (4) between or among members, registered
clearing agencies with which the NASD has entered into an agreement to
use the NASD's arbitration facilities and procedures, and participants,
pledges or other persons using the facilities of a registered clearing
agency.\8\
\8\NASD Manual, Code of Arbitration Procedure, Part I, Sec. 1
(CCH) 3701.
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The Code contains specialized procedures for certain categories of
cases. Part II of the Code\9\ contains procedures applicable solely to
industry and clearing controversies. Section 13 of the Code\10\
contains certain specialized procedures applicable to controversies
involving public customers and associated persons or members if these
controversies involve a dollar amount not exceeding $10,000.
\9\NASD Manual, Code of Arbitration Procedure, Part II, Secs. 8-
11 (CCH) 3708-3711.
\10\NASD Manual, Code of Arbitration Procedure, Part III, Sec.
13 (CCH) 3713.
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The NASD submitted this rule change because it believes that
certain large and complex cases may require special management beyond
that currently afforded by the Code. Therefore, the NASD is adding new
Section 46 to the Code setting forth procedures for handling and
managing large and complex cases. In part, some of the procedures
contain certain features of rules adopted by the American Arbitration
Association (``AAA'') for processing large and complex cases. Section
46 also contains certain features of the arbitration rules of the
National Futures Association. Many of the procedures in Section 46 also
are provided elsewhere in the Code; however, the NASD believes that
grouping these procedures together in a [[Page 7242]] single section
serves to emphasize the utility of these procedures for large and
complex cases.
The NASD stated that the procedures are intended to encourage the
parties to come to an agreement on the rules that will govern the
disposition of the matter. Under new Section 46, all cases that are
eligible for the procedures contained in that Section will be scheduled
for an administrative conference in order to determine whether the
parties can agree on ways in which the case should be administered.
Beyond the mandatory administrative conference, however, all parties to
an eligible matter must agree to continue with a proceeding under the
provisions of Section 46; otherwise, the Code provisions generally
applicable to arbitration matters will govern the proceeding. The NASD
stated that most of the provisions of the proposed rules will allow the
parties to adopt an alternative procedure of their own creation if they
can agree on such procedures.
Section 46 includes procedures for an administrative conference,
the appointment of arbitrators, and a preliminary hearing. The
provisions of the rule change are described in more detail below.
Finally, the rule change is a one year pilot program. It will
remain in effect for cases filed within one year from the date of
effectiveness (ninety days after the date of this order) unless the
NASD Board of Governors authorizes and the Commission approves its
modification or extension. During the pilot program the NASD will
monitor the implementation and utility of the rule change in order to
determine whether to add it permanently to the Code.
II. Substantive Provisions
A. Fees
Sections 43 and 44 of the Code, which specify the schedule of fees
for customer disputes and industry disputes, respectively, have been
amended to add subsections specifying that the fees and deposits for
matters submitted for arbitration under the large and complex case
rules shall be the fees and deposits otherwise specified for claims
over $5,000,000. As discussed further below in Section D., parties may
be assessed additional fees to compensate arbitrators. Parties may
condition their acceptance of the large and complex case rules on an
agreement with the NASD governing these fees.
B. Applicability
Section 46(a) specifies that the procedures for large and complex
cases will be applicable to disputes, claims or controversies
(``eligible matters'') in which the claim or counterclaim is at least
$1 million, including punitive or exemplary damages, but exclusive of
interest costs or fees, or in other cases in which the parties agree
that the matter should be subject to the procedures. This provision
permits parties with claims of less than $1 million to have their
matter heard pursuant to these procedures if, in their judgment, it
would be advantageous to do so.
Section 46(a) requires an eligible matter to be scheduled for an
administrative conference. As noted above, unless all parties agree,
the large and complex case rules will not govern arbitration of the
matter following the administrative conference. The procedures for an
administrative conference, discussed in detail below, bring the parties
together to consider the various issues involved in managing the matter
and to determine if any agreement can be reached on such issues. If the
parties fail to agree on procedures, they are not required to continue
under the large and complex case rules; the rules are not intended to
apply to cases if a party does not wish for them to apply. In order to
assist parties in deciding whether to proceed under the large and
complex case rules, the NASD will provide all parties with an
educational pamphlet.\11\ The pamphlet will discuss issues that parties
should address in a written document prior to submitting a matter for
resolution under the large and complex case rules, including, among
other issues, arbitrator selection and compensation, discovery and
whether an award will include a statement of reasons. Thus, the rule
change does not permit a selection of the large and complex case rules
in a predispute arbitration agreement. Rather, it specifically provides
that any agreement to proceed under such rules will be made at or after
an administrative conference.
\11\See letter dated October 12, 1994, to Mark Barracca, Esq.,
Branch Chief, SEC, from Suzanne E. Rothwell, Associate General
Counsel, NASD (``NASD Letter'').
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If all parties agree to continue the proceedings under the large
and complex case rules, Subsection (a) provides that the agreement
becomes binding on the parties once the last arbitrator is appointed.
This requirement reflects the NASD's view that parties devote
substantial resources to formulate procedures to govern a particular
matter. In addition, substantial effort and commitment is required to
appoint arbitrators. A party could be severely disadvantaged if it
devoted time and resources to arbitrating a matter under the large and
complex case rules, only to confront unilateral rejection of the
agreed-upon procedures later in the process.
In this regard, the NASD has stated that if, at any point after
such an agreement under Section 46 (a)(2) and (a)(3) becomes binding, a
member of the NASD or an associated person refuses to proceed with the
arbitration of the matter and, instead seeks to dismiss the action and
refile it in court, another arbitration forum, or with the NASD as an
ordinary arbitration action, the NASD would regard this action as a
violation of the member's obligation to arbitrate such matters under
the Code subjecting the member of associated person to potential
disciplinary action. Further, the NASD has stated that any failure by
any party to proceed after the agreement becomes binding may be
addressed under various provisions of the Code which permit the
arbitrators to issue orders, penalize parties and make awards without
the attendance or participation of a party.\12\
\12\See e.g., NASD Manual, Code of Arbitration Procedure, Part
III, Secs. 29, 32, 33 and 35 (CCH) 3729, 3732, 3733 and 3735.
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C. Administrative Conference
Section 46(b) provides for an administrative conference of the
parties to an eligible matter to discuss, among other things, the claim
and amount in dispute, arbitrator preferences, procedures, discovery,
scheduling and settlement. In its filing with the Commission, the NASD
indicated that this provision is intended to bring the parties together
to air and discuss all issues related to the arbitration, to exchange
information on procedural and scheduling matters, and to reach
agreement on as many procedural and scheduling issues as possible in
order to facilitate the orderly and expeditious resolution of the
matter. The filing notes that if it becomes apparent that one or more
parties are not amenable to proceeding under the large and complex case
rules, the administrative conference will have served its purpose and
the matter may proceed under the other provisions of the Code.
The NASD expects that parties will have reviewed the NASD's
pamphlet before the administrative conference. Among the topics to be
addressed in the pamphlet are the issues that parties should address in
a written agreement under Section 46 (a)(2) and (a)(3) prior to
submitting a matter for resolution under the large and complex case
rules, [[Page 7243]] including: (1) Arbitrator selection; (2)
additional fees for arbitrator compensation; (3) whether the parties
will use the prehearing discovery rules included in these large and
complex case rules, whether they will use the prehearing discovery
rules elsewhere in the Code, or some other prehearing procedures; and
(4) whether the parties are contracting for the arbitrators to provide
a written statement of reasons. The pamphlet also will disclose that,
if the parties fail to address any of these issues, the issues may need
to be resolved by the arbitration department or the arbitrators, as
appropriate under the assignment of responsibilities under the large
and complex case rules and other Code provisions. The pamphlet also
will highlight the fact that a significant feature of the large and
complex rules is that arbitrators are authorized to dismiss the case,
or any part of it, on the written submissions of the parties without
any oral hearing.
D. Appointment of Arbitrators
Section 46(c) provides for the appointment of a panel of three
arbitrators to hear eligible matters. At least one arbitrator must be
an attorney.
The NASD intends to establish a pool of separately qualified
arbitrators to hear many of the cases under the large and complex case
rules.\13\ The NASD also indicated that it will also draw from its
regular pool of arbitrators as necessary to fill panels for eligible
matters. Moreover, in order to attract arbitrators to serve on panels
hearing eligible matters, Section 46 contains a mechanism to provide
additional compensation for those arbitrators. Section 46(c)(4)
provides that prior to the selection of the arbitrators, the parties
may agree to pay, and that the Director of Arbitration has discretion
to assess, compensation to be paid to the arbitrators by the parties in
addition to the honorarium specified by the Board of Governors. The
additional compensation would reflect the magnitude and complexity of
the matter arbitrated under the alternate large and complex case rules.
Under the provision, the amount of any such additional compensation
also must be decided before the selection of the arbitrators. Section
46(a)(4) requires parties to pay arbitrator fees prior to the first
hearing or the next scheduled hearing, as applicable.
\13\The NASD has indicated that it intends to identify
arbitrators qualified to preside over such cases on the basis of
training, experience, varied knowledge and expertise. Qualifications
for inclusion in the pool may be based on, among others, the
following factors: (1) Attendance and successful completion of
course(s) relating to large and complex cases; (2) experience and
regular service as an arbitrator; (3) knowledge or expertise in the
subject matter or technical aspects of the dispute; (4) length of
service as an Association arbitrator; and (5) professional and
business expertise.
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Under the procedures established by the NASD, the staff member
assigned to conduct the administrative conference must discuss the
availability of arbitrators with the parties at the administrative
conference and obtain the agreement of the parties on how to proceed if
availability is a problem. The parties may, for instance, make further
proceedings under the large and complex case rules contingent upon the
availability of specially qualified arbitrators or upon specific
compensation arrangements.
Finally, while the rules contemplate that eligible matters will be
heard by panels of three arbitrators, at least one of whom is an
attorney, Section 46(c)(1) permits the parties to agree to submit a
matter to a single mutually acceptable arbitrator.
A panel may be appointed in one of three ways: (1) Pursuant to the
usual procedures in Section 19 of the Code, if the parties cannot agree
on another method; (2) pursuant to a procedure set forth in Section
46(c)(3); or (3) pursuant to a procedure agreed to by the parties.
The procedure set forth in Section 46(c)(3) provides that each
party simultaneously will be provided with two lists of arbitrators:
the first list will be composed of securities industry arbitrators and
the second list will be composed of public arbitrators. The lists will
include certain biographical information, with other information
available on request. Within 20 days of the transmittal of these lists,
each party may challenge peremptorily or for cause any or all
arbitrators on the lists and must rank the remaining arbitrators on its
lists in order of preference with ``one'' (1) indicating the most
preferred arbitrator. Any party failing to challenge, rank and return
the lists will be considered to have accepted all listed arbitrators.
After receiving the lists from the parties the Director of
Arbitration will prepare two consolidated lists (one of public
arbitrators and one of industry arbitrators) of the arbitrators by
combining the parties' lists of acceptable arbitrators and
consolidating the rankings. Under the provision, this is accomplished
by preparing a combined list composed solely of those arbitrators
acceptable to all parties and then adding the number rankings assigned
by each party together to achieve a consolidated rank.
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Consolidated
Party A Party B rank
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Arbitrator #1........................... 1 3 4
Arbitrator #2........................... 3 2 5
Arbitrator #3........................... 4 1 5
Arbitrator #4........................... 2 5 7
Arbitrator #5........................... 5 4 9
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In order to ensure that a panel has at least one attorney, the Director
will extend the first invitations to the highest ranking attorneys on
either list. If each attorney accepts, the NASD will select the
attorney who received a higher ranking from a party. Once an attorney
has been named to the panel, the Director will continue to extend
invitations to arbitrators in the order of their consolidated rank
until the panel has been filed by the required number of public and
industry arbitrators. Under the provision, if a panel cannot be
appointed from the consolidated lists, the remainder of the panel will
be appointed under the regular arbitration provision in Section 19 of
the Code.
Finally, pursuant to Section 46(c)(3)(E), if a challenge for cause
is successful after the appointment of the panel is complete, Section
46(c)(3)(E) permits the Director of Arbitration to reopen the selection
process at the point where the last arbitrator was appointed and
continue the process as through the challenged arbitrator had never
been appointed.
E. Preliminary Hearing
Section 46(d) provides that the arbitrators will convene a
preliminary hearing promptly following the appointment of the panel.
Once the arbitrators convene the preliminary hearing, the Director of
Arbitration will appoint a single arbitrator to preside over the
preliminary hearing and the presiding arbitrator will have the power to
act on behalf of the panel on any appropriate matter arising before or
after the preliminary hearing. The presiding arbitrator will also have
unlimited discretion to refer any such matter to the full panel for
consideration. Matters which may be brought to the presiding arbitrator
for resolution include: stipulations as to uncontested facts,
exchanging and premarking exhibits to be offered at the hearing, and
the schedule, form, scope and use of sworn statements and depositions.
In addition, the presiding arbitrator may consider any other matter
ripe for resolution at the prehearing stage, including encouraging
medication or other non-adjudicative resolution of the matter.
[[Page 7244]]
F. Settlement of Eligible Matters
Section 46(e) also provides for the parties to give arbitrators
information about their settlement efforts. The provision states that
if an eligible matter is not settled prior to the first hearing date,
the parties must submit either a joint statement or individual
statements to the arbitrators, setting out a record of the dates and
duration of any discussions and the fact that the discussions did not
result in settlement, but must not include any statement disclosing the
dollar value of any settlement offer or proposal discussed by the
parties. The NASD indicated that this subsection is included because it
might provide arbitrators with additional information concerning the
issues in dispute. The prohibition against disclosing dollar amounts
discussed is intended to avoid suggesting dollar values for any award
ultimately made by the arbitrators.
G. Management of Proceedings
Section 46(f) sets out general and specific powers granted to the
arbitrators to enable them to manage the proceedings. The arbitrators
may, without limitation, delegate their powers under subsection (f) to
a single arbitrator to be exercised either in the preliminary hearing
or at any other time prior to the hearing. The large and complex case
rules specifically permit arbitrators to rule on dispositive motions,
such as motions to dismiss on any grounds, including the applicability
of a statute of limitations, or motions for summary judgment on
specific issues such as liability or damages, or on the whole matter.
As noted above, the pamphlet will highlight this provision so that
parties may determine whether they wish to utilize the large and
complex case rules or whether they wish to agree specifically to amend
the panel's ability to rule on dispositive motions.
A significant difference between the large and complex case rules
and the rules for other cases administered under current Code
provisions concerns the prehearing procedures, or ``discovery''
process. The large and complex case rules rely to a significant extent
on the parties to bargain for setting the scope of discovery. Absent a
specific agreement by the parties in the agreement under Section 46
(a)(2) and (a)(3) to proceed under these rules, parties are to use the
procedures in Section 46(f). These procedures differ from the present
Code in that depositions and interrogatories are intended to be limited
to determining and preserving testimony and facts relevant to the
determination of the matter, not for conducting discovery.\14\ Further,
interrogatories are limited to twenty questions, including parts and
subparts. The pamphlet will highlight these and other differences
between discovery under the large and complex case rules and discovery
under current provisions of the Code and will advise parties that they
may agree to modify the discovery rules contained in Section 46(f).
\14\By contrast, Section 32 of the Code provides that an
arbitrator may ``issue subpoenas, direct appearances of witnesses
and production of documents, set deadlines for compliance, and issue
any other ruling which will expedite the arbitration proceedings.''
NASD Manual, Code of Arbitration Procedure, Part III, Sec. 32 (CCH)
3732.
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Finally, Section 46(f) authorizes arbitrators to conduct special
proceedings as necessary to resolve any such matters before them.
Special proceedings may take any form specified by the arbitrators, and
may be conducted in person, via teleconference, on written submissions
alone, or by any other method.
H. Form Award
Section 46(g) specifies that the award in an eligible proceeding
shall be in the form prescribed in Section 41 of the Code. Arbitrators
may at their own initiative issue an award that is accompanied by a
statement of reasons or basis of the award. Although not specifically
addressed by Section 41, it has been the position of the NASD that
arbitrators are permitted under that Section to issue a statement of
reasons or basis for the award and arbitrators have issued such
statements in many cases.
In addition, the Section provides for arbitrators to issue a
statement of reasons or basis of the award if the parties specifically
so agree. Accordingly, even in situations where the arbitrators would
not otherwise issue a statement accompanying the award, the arbitrators
would nonetheless do so where all of the parties have specifically
agreed that a statement of the reasons or basis of the award should
accompany the award.
I. Sunset Provision
Section 46(h) of the proposed rule change specifies that the large
and complex cases rules will remain in effect for one year following
the effective date, unless the Board of Governors authorizes their
modification or extension.\15\
\15\Any such modification or extension must be filed as a
proposed rule change with the Commission pursuant to section
19(b)(1) of the Act and Rule 19b-4 thereunder.
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III. Comment Letters
The Lipner Letter states that there were both positive and negative
aspects to the large and complex case rules, and recommended certain
changes to the rule change to enhance the equitable nature of the
arbitration process. NELA's comments were limited to the arbitration of
employment disputes. NELA opposes the rule change in the context of
employment disputes. As a general matter, NELA objects not only to the
proposed rule change but to mandatory arbitration of complex
employment.\16\ The NELA Letter states that employment disputes
typically turn on legal issues rather than factual issues. NELA
believes that it is inappropriate for a panel composed of a majority of
non-lawyers to decide these issues. Furthermore, the NELA Letter states
that arbitration does not provide the opportunity for the development
of employment law. The Commission believes that, whatever the merit of
these arguments, they are not germane to the instant rule change.
\16\The Commission approved a proposed rule change to Sections
1, 8 and 9 of the Code in 1993 that provides that disputes, claims,
or controversies arising out of the employment or termination of
employment of an associated person are eligible for submission to
arbitration. See Securities Exchange Act Release No. 32802 (Aug. 25,
1993), 58 FR 45932 (Aug. 31, 1993). That proposed rule change was
prompted by two court decisions interpreting the Code so as not to
cover employment disputes. The California Court of Appeals held that
Section 8 of the Code did not cover employment disputes, but only
covered disputes arising out of or in connection with business
transactions. Higgins v. Superior Court of Los Angeles County, 1
Cal. Rptr. 2d 57 (1992). The Seventh Circuit concluded that the NASD
Code of Arbitration as then drafted, did not require the arbitration
of employment disputes between an NASD member and its associated
person. Farrand v. Lutheran Brotherhood, 993 F.2d 1253 (7th Cir.
1993). NELA did not comment on that proposed rule change.
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The NELA Letter also states that the large and complex case rules
``are clearly designed to give the defendants all of the advantages of
litigation in defending the cases while fatally disadvantaging the
party with the burden of proof.'' As noted above, parties will be able
to modify all provisions of Section 46 with an agreement under Section
46 (a))(2) and (a)(3) (other than the mandatory administrative
hearing), and if parties do not agree upon procedures to govern the
matter, than Section 46 will not govern the arbitration of the matter.
The NELA Letter also objects to the level of fees imposed upon
large and complex cases. The NELA Letter states that the level of fees
is exorbitant given that the employee does not have the option of going
to court. The Commission notes that Section 46(a)(4) grants the
Director of Arbitration the [[Page 7245]] authority to waive forum fees
and grants the arbitrators the discretion to apportion all fees and
charges assessed on the parties other than hearing session deposits.
The Lipner Letter objects to Section 46(b)(8)(C), which provides
that one purpose of the administrative conference is to develop a
statement of the legal authorities related to the matters in dispute to
be brought to the attention of the arbitrators. The Lipner Letter views
this provision as transforming the arbitration process into one that is
more akin to litigation. The Commission believes that this provision
recognizes that legal issues are argued routinely in arbitration and
that this provision may assist parties in formulating and assessing the
strength of their claims. It is a reasonable approach for the NASD to
adopt.
Both the NELA Letter and the Lipner Letter object to Section
46(f)(3), which permits arbitrators to rule on dispositive motions,
such as motions to dismiss on any grounds, including the applicability
of a statute of limitations, or motions for summary judgment. Both
commenters argue that permitting such motions and the attendant legal
briefing is inconsistent with the nature of the arbitration process.
The Commission believes that parties should be cognizant of this
feature of the large and complex case rules before they agree to
arbitrate pursuant to the large and complex case rules. The Commission
believes that the pamphlet will alert parties to this provision. As
noted above, parties will be able to modify this provision under an
agreement under Section 46 (a)(2) and (a)(3), and, if no agreement is
reached, then the large and complex arbitration rules will not govern
the arbitration of the matter.
The NELA Letter objects to Section 46(f)(2), which limits
depositions and interrogatories to determining and preserving testimony
and facts relevant to the determination of the matter, rather than for
conducting discovery. NELA believes that not permitting depositions for
discovery is a significant disadvantage to employees and causes the
arbitration process to be skewed in favor of employers. The Commission
is not unmindful of the concerns expressed by NELA. However, the
Commission believes that parties may either modify these procedures
through the agreement reached under Section 46 (a)(2) and (a)(3) to
permit depositions for purposes of discovery, or failing agreement, may
arbitrate in accordance with the rules governing arbitration elsewhere
in the Code. Moreover, experience with this provision of the pilot
rules can be evaluated in the event that the NASD determines to propose
these rules for permanent inclusion in the Code. The Commission also
intends to monitor cases arbitrated under the large and complex case
rules to determine whether parties are being disadvantaged by the
limited scope of discovery.
IV. Discussion and Findings
The Commission finds that the proposed rule change is consistent
with the provisions of Section 15A(b)(6) of the Act\17\ because it may
encourage the arbitration of large and complex cases in a manner
consistent with the objective of a just, efficient and cost-effective
resolution of those cases, and will provide parties with the
flexibility to formulate their own procedures. The flexibility will
serve the public interest by permitting parties to tailor arbitration
proceedings in a manner which enhances their ability to pursue their
claims.
\17\U.S.C. 78o-3.
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It is therefore ordered, pursuant to section 19(b)(2) of the Act,
the File No. SR-NASD-94-10 be, and hereby is approved for a one year
period beginning May 2, 1995.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-2972 Filed 2-6-95; 8:45 am]
BILLING CODE 8010-01-M
