The NASD Arbitration Procedure Code (Code) requires defendants in NASD arbitration proceedings to provide them with a response and a uniform submission agreement (United States) executed at the time of the expiry of the response to the request. NasD has learned that some members and associated persons, who are named as defendants in arbitration proceedings, neglect or refuse to file an undersigned America in a timely manner. Failure to sign and file the United States can create confusion, cause collatrial disputes, and undermine the applicability of arbitral awards. The purpose of this statement is to remind members and related persons cited as respondents that filing by a United States without a particular legal challenge is mandatory and that non-compliance may result in sanctions or disciplinary action. NASD employees have learned that some members and related persons, cited as respondents, neglect the United States or refuse to sign them. While these members and related persons may consider that the signature of the United States is not necessary, since they must in any event submit to arbitration under the Code, the non-signature of the United States may create unnecessary confusion or even ancillary disputes on the part of the opposing party and threaten the possible arbitral award. For example, Section 13 of the Federal Arbitration Act (FAA) requires that a request for confirmation of an arbitral award contain the parties` agreement to the arbitration. While a claimant can prove that a member that did not perform the United States was nevertheless required to arbitrate under the NASD rules, U.S. non-performance may unnecessarily impede a claimant`s ability to seek confirmation of an arbitral award pursuant to Section 13 of the FAA.
Questions regarding this statement may be directed to Laura Gansler, Counsel, NASD Dispute Resolution, at (202) 728-8275 or by email at [email protected]. NasD hopes that these measures will serve as an effective reminder to members and associated persons designated as responders to NASD arbitration, that they will have to submit the U.S. in a timely manner, as provided for in the code, thereby reducing the need to amend the rules or other additional measures to resolve the issue. The purpose of this statement is to remind members and related persons who are cited as respondents in NASD arbitration proceedings that filing by a United States is mandatory. In the absence of a concrete and coloriable objection that the defendant is not subject to arbitration proceedings under Rules 10101, 10201 or 10301 of the Code, the failure of a respondent to bring forward a United States in a timely manner may give rise to sanctions by the arbitration panel and, in certain circumstances, be considered a violation of the just and just business principle and NASD 2110 rule.