October 3, 2006
I write concerning the NASD's proposal concerning motions to dismiss. I have represented investors in customer/broker disputes for a decade and have seen broker-dealer respondents file a proliferation of abusive and frivolous motions to dismiss over the past two years.
These motions turn what is supposed to be an efficient means of resolving disputes into a much more costly and time consuming process. Such additional time and costs are unwarranted. For the most part, the motions to dismiss raise issues that have no business being raised as motions to dismiss. But because of the lack of firm NASD opposition to such motions, broker-dealers take advantage of the system without any real risk of any negative impact to them.
While there are rare times when such motions could be warranted (such as the dispute already has been settled or the wrong respondent was named), without any risk to filing motions to dismiss broker-dealers will continue to file frivolous motions and alter a supposedly streamlined dispute resolution process into an unnecessarily time-consuming process. As such, there should be a mechanism that would discourage respondents from filing baseless motions. Such a mechanism could be in the form of requiring teh respondent to pay claimant's attorneys' fees if the respondent does not prevail on the motion. This likely would discourage the filing of frivolous motions.