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The Pre-Hearing Conference
Shortly after the arbitrators are selected, the NASD will hold a pre-hearing conference. The pre-hearing conference is a short (15 to 30 minutes) telephone conference during which the arbitrators and involved parties establish a discovery and hearing schedule. At that time, the arbitrators will generally ask the parties if they are willing to mediate their dispute.
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Mediation
Mediation is a process in which a professional mediator assists the parties in negotiating their dispute. The goal of the mediator is to have the parties leave the mediation with a signed mediation agreement that resolves the dispute. I have often found that both the claimant and respondents usually leave the mediation feeling that they were treated fairly, although they seldom get precisely what they were hoping for. Often, they are glad that they made the decision among themselves instead of leaving total authority to a third party. It is no surprise then, that NASD statistics show that four out of every five cases that are brought before a mediator are resolved. Importantly, when the parties agree to mediate, they do not give up any rights to arbitrate if the mediation is not successful. However, it is imperative to keep in mind that the respondents do learn more about the claimant’’s case during mediation. They can later use this information during a subsequent arbitration hearing.
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The Discovery Process
During the discovery process, all relevant documents are exchanged by the parties. The NASD now provides a list of required documents that each party must turn over to the other. When one party does not wish to turn over certain documents, the arbitrators will get involved in the discovery dispute and either help the parties resolve the discovery issues or issue an Order requiring that the documents be provided. Should the documents not be released, the arbitrators may prevent the liable party from proceeding with their prosecution or defense.
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The Hearing
Hearings typically follow a set pattern. At the hearing each party is given the opportunity to briefly describe their case during an opening statement. Following this, they then present their evidence and may call witnesses. Next, each side may cross exam opposing witnesses before making their closing arguments which summarizes their case.
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After the Hearing
Immediately after the hearing, the arbitrators ask the parties to leave the room that the hearing was held in. They then begin to discuss the case and render their decision. This is not revealed to the parties at this time. Instead, the arbitrators report their decision to the NASD which prepares a written decision for the arbitrators to sign. The NASD then forwards the decision to the parties. The decision of the arbitrators is binding and there are very limited grounds to appeal it. Particularly frustrating to claimants is that the decision is rendered with no written discussion as to why the arbitrators ruled in a certain way. Hence, a disappointed claimant will not learn the reason for the decision and may leave feeling that it was unfair.
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