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GAO-01-654R 1 (2001-04-27)

handle is hein.gao/gaocrptanim0001 and id is 1 raw text is: SGAO Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 April 27, 2001 The Honorable John D. Dingell Ranking Minority Member Committee on Energy and Commerce House of Representatives The Honorable Edward J. Markey House of Representatives Subject: Evaluation of Steps Taken to Address the Problem of Unpaid Arbitration A wards Our June 2000 report, Securities Arbitration: Actions Needed to Address the Problem of UnpaidA wards,' revealed that a significant proportion of awards against brokers had not been paid to investors. Most of the unpaid awards were owed by brokers that had left the securities industry. The Securities and Exchange Commission (SEC) and securities self-regulatory organizations (SRO) have taken substantial actions to implement recommendations we made to address this problem. This letter responds to your January 17, 2001, request that we review the status of certain issues addressed in our June 2000 report. Our objectives were to (1) evaluate steps that SEC and the SROs have taken in response to recommendations in our report, (2) provide any updated information on the arbitration award payment rate since our last report, and (3) to comment on proposed solutions to the unpaid award problem made in correspondence to you by William S. Shepherd, a Texas securities attorney. Results in Brief SEC and the National Association of Securities Dealers-Dispute Resolution, Inc? (NASD-DR) have taken several positive steps in response to our report recommendations that could help reduce unpaid awards. For example, NASD-DR has begun monitoring the payment of awards by NASD member broker-dealer firms and individual brokers and now asks investors that have won arbitration awards to inform it when awards are not paid. NASD-DR also has developed procedures to help investors seek alternatives to arbitration when their broker-dealers have failed. For 'Securities Arbitration: Actions Needed to Address the Problem of UnpaidA wards (GAO/GGD-O0-1 15, June 15, 2000). 'In July 2000, NASD-DR became operational as a subsidiary of the National Association of Securities Dealers (NASD). NASD-DR administers NASD arbitration, mediation, and other alternative dispute resolution services. GAO-01-654R Unpaid Arbitration Awards

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