NASD Approves Arbitration Changes

The National Assn. of Securities Dealers has approved two proposed changes to the arbitration system used by investors who have a beef with their stockbrokers. As a result of the changes, punitive damage awards will be capped at $750,000, a concession to brokers, who opposed punitive damages. And investors whose cases are too old for arbitration are less likely to be blocked by brokers from going to court. Executives of the regulatory arm of the NASD characterized the changes as a compromise that would not entirely satisfy either investors or brokers. The proposed rules must be approved by the Securities and Exchange Commission. Any modification of the arbitration system is of importance to investors because they cannot currently take a broker to court if arbitration is available.