In addition, the NYSE welcomes the contribution made by Prof. Michael Perino, visiting professor at Columbia Law School and associate professor at St. John's University School of Law. Prof. Perino was asked by the SEC to assess as an independent consultant whether the disclosure requirements of the NYSE and NASD should be modified to reflect any of the California standards. Prof. Perino concludes in his report -- posted on www.sec.gov -- that there is little if any indication that undisclosed conflicts represent a significant problem in SRO (self-regulatory organization) arbitrations.
Further, Prof. Perino's report finds that adopting the California standards would likely yield very few benefits for investors, and may impose significant costs and have unintended negative consequences. Prof. Perino states that changing current rules to define potential conflicts more broadly may deter well-qualified arbitrators from serving or disqualify those with significant expertise from hearing a case -- the result being less-accurate case resolutions and more judicial challenges to arbitral awards. These conclusions are consistent with the NYSE's position. The NYSE will review with the SEC the analysis and minor recommendations in the report.
With respect to the Nov. 12 decision by the U.S. District Court for the Northern District of California, the NYSE notes that Judge Conti ruled in favor of it and the NASD on the significant issues of the Court's jurisdiction over the suit, the SROs' standing to sue, and the justiciability of the claim. Moreover, Judge Conti recognized that the NYSE and NASD may have suffered a wrong without a remedy, at least in Federal Court and at this time. The Exchange is continuing to analyze the decision and evaluate its options.
