Zamansky & Associates

Letter to NYSE Regulation, Inc.

by on April 3, 2006

Mr. Daniel Beyda
Chief Administrative Officer
NYSE Regulation, Inc.
Dispute Resolution/Arbitration
20 Broad Street - 5th Floor
New York, NY 10005

Dear Daniel:

It was with great dismay that I read your letter-to-the-editor in the March 28, 2006 Wall Street Journal responding to my opinion-editorial entitled “Spitzer vs. the Little Guys,” published March 20, 2006. While I am pleased that you took notice of my concerns, the statistics you cite are misleading and your claims that the NYSE is committed to reforming its arbitration process ring hollow.

For starters, the fact that half of all the NYSE’s dwindling arbitration cases are settled is nothing to brag about. Attorneys who file arbitration claims at the NYSE quickly learn that the system is highly biased in favor of Wall Street. As a result, they ultimately decide to settle their cases because they know it’s highly unlikely that they can win them. Your claim that the settlements “presumably” involve “the customer receiving monetary payment from the securities firm” also is misleading; the vast majority of NYSE arbitration awards and settlements involve payments representing a mere fraction of the losses claimed.

It is inappropriate to suggest that the introduction of a computerized, random list selection of arbitrators is somehow an improvement. At the end of the day, the NYSE’s shallow pool of arbitrators largely consists of “old, white men” who are largely unsympathetic to individual investors. It makes no difference whether the arbitrators are assigned by staff appointment or a computer.

You conveniently ignore one statistic that speaks volumes: the number of arbitration cases filed at the NYSE has plummeted more than 40 percent since John Thain took over as CEO. For all the accusations about Dick Grasso’s alleged conflict-of-interests, individual investors still fared better during his tenure. I also doubt that Mr. Grasso would allow the elimination of the NYSE’s regulatory arm, as Mr. Thain appears ready to do.

Finally, your comment that the NYSE welcomes “input from all users of our forum” cannot go unchallenged. As you may recall, you and I met over two years ago to discuss my concerns and you indicated that they would be addressed. Instead, the situation has deteriorated further. It is disheartening that the NYSE prefers to defend a broken arbitration system rather than fix it.

Sincerely,

Jacob Zamansky