Immunity in Arbitration Proceedings for Statements Made on Forms U-4 and U-5

The Legal and Compliance Division and the Federal Regulation Committee of the Securities Industry Association (SIA)* provides comments to the Securities and Exchange Commission (SEC) on the National Association of Securities Dealers, Inc. (NASD) proposed new Rule 1150 which would establish a national, uniform standard of qualified immunity from arbitration proceedings filed against member firms with respect to statements they make on Forms U-4 and U-5 (Forms), File No. SR-NASD-98-18; Release No. 34-39892.  SIA believes that the proposal helps strike an appropriate balance between encouraging candid and accurate disclosure by member firms on Forms U-4 and U-5 and allowing member firms to defend themselves against frivolous actions alleging that statements made on the Forms are defamatory. In addition, SIA offers additional observations and recommendations about the proposal.

In a subsequent letter, SIA’s Self-Regulation and Supervisory Practices Committee offered its support for the comments filed by the Legal and Compliance Division and the Federal Regulation Committee.

*SIFMA is the product of a merger between the Securities Industry Association (SIA) and The Bond Market Association (TBMA) in 2006.