September 21, 2006
I represent customers with complaints filed with the NASD against brokers and financial planners. It has become an increasing practice by defense firms to make motions to dismiss prior to hearings based upon various grounds from time limitations to no local statutory or case law support to no cause of action can be commenced based on rule violations etc. In every motion that I have been required to respond, there are always "issues of fact". The customer who has already lost significant sums of money, now has an additional and costly roadblock to their "day in court" and must prepare briefs and incur the cost of the panel to hear oral argument. Issues of fact can not and should not be decided on motion papers.
I believe the arbitration process should be an opportunity for a claimant to "tell their story" without the legal obstacles now being used by member firms. How could a claimant process their claim without counsel and/or bear the increased cost of representation with all the prehearing motion practice now being encouraged by the NASD. Why not just follow the rules of the NYSE. No pre hearing motions.
If a claim fails for whatever reason, the claimants at least should be able to say that they had a fair opportunity to be heard, without the additiional burden of arguing their case prehearing based on some legal theory for dismissal. There is no prejudice to anyone to conduct a hearing without motions to dismiss prior to an arbitration hearing.