Proposal Relating to Qualified Immunity For Certain Firms in Arbitration

The Bond Market Association (TBMA) provides comments to the Securities and Exchange Commission (SEC) on a proposal by the National Association of Securities Dealers, Inc. would establish a uniform standard of qualified immunity for firms in NASD arbitration proceedings with respect to disclosures made on Forms U-4, U-5 and others, SR-NASD-98-18.  TBMA supports certain aspects of the proArposal but makes strong recommendations including:

• the Rule need not be subject to a four-year pilot program arrangement, since the most objectionable provisions of the Rule in the First Proposal – the proposed ten-day advance review period and the proposed expedited arbitration or mediation procedures – have been eliminated from the Rule as proposed;
• the Rule should make clear that the qualified immunity standard it establishes is a minimum standard, and does not supplant higher standards already in existence in certain jurisdictions; and
• the qualified immunity granted under the Rule should apply more broadly to claims with respect to disclosure made on a covered form, rather than solely to those claims characterized by the claimant as defamation.

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