NASD employees have learned that some members and associates, cited as respondents, are neglecting or refusing to sign the United States. While these members and associates may believe that the U.S. signature is not necessary, since they are in any event required to submit to arbitration under the code, the non-signature of the United States may create unnecessary confusion or even incidental litigation on the part of the opposing party and jeopardize the eventual award of arbitration. For example, Section 13 of the Federal Arbitration Act (FAA) requires that an application for confirmation of an arbitration award contain the parties` arbitration agreement. While an applicant can prove that a member who did not export to the United States was nevertheless required to mediate in accordance with the NASD rules, U.S. non-enforcement may unnecessarily impede a complainant`s ability to seek confirmation of an arbitration award pursuant to FAA Section 13. The purpose of this communication is to remind members and associates, who are cited as respondents in NASD arbitration proceedings, that a U.S. application is mandatory. In the absence of a concrete and colourful objection that the respondent is not subject to arbitration proceedings in accordance with Rules 10101, 10201 or 10301 of the Code, a respondent`s failure to file a complaint in a timely manner in the United States may result in sanctions by the Court of Arbitration and, in certain circumstances, be considered a violation of a fair and equitable business principle and the NASD 2110 rule. In addition to the publication of this notice, NASD Dispute Resolution will initiate a practice to inform all parties of the U.S. status prior to the first preliminary hearing conference (IPHC) so that each party will know whether each other party has properly executed the United States prior to the start of the IPHC.
This will allow the parties to ask arbitrators to require USAs from any party that has not yet executed any. Finally, NASD Dispute Resolution will modify the script used by IPHC referees to resolve this issue. In particular, the script will contain a statement by arbitrators that any party that has not yet submitted the United States must do so or, within 30 days, must contradict the NASD jurisdiction in writing on the basis described above, and that this cannot result in sanctions, as required in the code, or possible disciplinary action.