The Explained Award of Damocles: Protection or Peril in Securities Arbitration

Abstract

This article examines the NASD's proposal to change its Code of Arbitration Procedure to require NASD arbitrators to write explained awards upon the customer's request. The article evaluates the pros and cons of the proposal, and the policy reasons why such a rule change might be desirable. The authors conclude that it is unclear whether the proposal will increase investor protection and enhance perceptions of fairness, though, if adopted, it will add transparency and investor choice to the arbitration process.

Keywords: arbitration, securities arbitration, arbitration awards