NASD Opposition Hurts Investor Confidence

As a former NASD securities arbitrator who resigned because the National Assn. of Securities Dealers refused to comply with California’s new rules regarding disclosure of conflicts by their arbitrators, I was saddened to read that the NASD continues to refuse to comply with the rules [“Arbitration Halt Frustrates Investors,” Sept. 18].

Even SEC Chairman Harvey Pitt seems to have no control over the NASD, which makes one wonder what really is going on on Wall Street.

The NASD contends that the new California law requiring disclosure of conflicts of interests is too cumbersome and costly. In my opinion, that contention is simply a smoke screen.

What the NASD is afraid of is that if it is required to follow the new disclosure rules, it will have a new set of arbitrators who may not be so pro-industry as the present setup. The NASD may have to deal with more female, more younger and more non-white arbitrators.

In my years as an arbitrator, the vast majority of my fellow arbitrators, while very ethical, were mostly retired, white and male. They were paid little and given no paid training, so what did one expect. The NASD simply does not want to give up control of the arbitration proceedings.

I find it amazing in this time of lack of confidence in the stock market that instead of promoting full disclosure by their arbitrators of any conflicts, the NASD is promoting less disclosure. Instead of trying to increase confidence in the stock market, the NASD is going in the opposite direction.

Thomas Edward Wall

Rancho Palos Verdes