Instructions For Filing Your Statement Of Claim Continued

The Answer will be served directly upon you by each Respondent. Respondents will also provide copies to the NASD for its file and for the arbitrators. As with the SOC, the Answer must specify all the facts on which the respondents depend. It will also include all of Respondents exhibits. Review the Answer carefully upon receipt. You may be able to point out facts that disagree with your recollection. The Claimant in a simplified arbitration may file a rebuttal to an Answer, but this is only wise when there are specific facts that may be refuted with evidence. If you simply see clear through the Respondents' arguments, trust that the arbitrator will see through them too. But if you have proof--use it. You likely won't get another chance.

4. Counterclaims

On occasion, a Respondent may serve a claim against you called a counter-claim. The most likely scenario involves a debit balance in a margin account. If a counter-claim is served, you must file an Answer. You will be informed of the due date of the Answer. Do not miss this date.

An Answer to a counter-claim is much like the Answer to your claim. Explain why the facts set forth in the counter-claim are wrong. (If they aren't, think about any offset they may create; you may wish to contemplate a settlement.) As always, your exhibits are of paramount importance.

Serve the Answer to the counter-claim on all opposing parties and the NASD. A new Submission Agreement is not necessary. The arbitrator will consider all claims and counter-claims at one time.

5. Selecting an arbitrator

Before your case is sent to an arbitrator for his decision, you will be given his name, relevant experience, qualifications, and a list of prior awards. This information should be studied as soon as it comes in; you will have five days from receipt to accept or reject the proposed arbitrator. If you decide to keep him (which is usual), you need do nothing. But if you want to reject, or "challenge" him, you need to act quickly.

Why would you want to challenge an arbitrator? There are two categories of reasons: "peremptory" challenges and challenges "for cause." We will examine both.

A peremptory challenge can be exercised for any reason­­or no reason­­at all. You may study the arbitrator's background and feel he has insufficient qualifications to judge your type of case. You may see that he has worked for the same law firm (single arbitrators are normally attorneys) that represented your ex­spouse in your divorce. Or, as is most often the case, you simply review the awards he has given and find he's more likely than not to find against you.

How do you get his prior awards? The NASD will provide you with a form to request them. Take advantage of it. The NASD will toll (delay) the time to make a decision so that you can receive the awards and look them over, but that's all. You still have only five days, counting the days from the date of receipt of the arbitrator's name until you request his awards, and then starting up again the moment they are sent to you. (The NASD will give you an option on delivery; choose faxed awards. There are many fax service locations throughout the country that will not only send faxes for you but allow you to receive them as well.)

What if you find that this arbitrator has never awarded a cent to a claimant. You write to the NASD (again, use a fax) and tell them you are issuing a peremptory challenge to the arbitrator. You don't have to tell them why, and you won't upset the arbitrator, it happens every day. And the NASD will supply you with a new arbitrator.

Beware of one thing, however: Each side has only one peremptory challenge. And there's always the possibility that you may not like the next guy any better. Fortunately, challenges for cause are unlimited. You can issue as many of them as you like­­as long as you have sufficient reason. While a peremptory challenge is always granted, a challenge for cause must pass the NASD's muster. A challenge for cause is issued when something in the arbitrator's history makes you think that he might not be able to hear the matter at hand with complete impartiality.

Any time an arbitrator is appointed to hear a case, he is required to disclose any known conflicts or connections he may have with any party or representative. He may not, however, recognize all the names involved, or even know of a conflict that may arise. In this case, a challenge for cause may be requested. Perhaps you see that this arbitrator once worked for the firm you are suing. Perhaps he doesn't think that will be a problem (and the other side doesn't mind!) but you don't like it. You immediately contact the NASD and tell them you are issuing a challenge for cause, and give your reason. The NASD will contact the opposing parties and the arbitrator to obtain their input. The challenge will be granted, or denied. If a challenge for cause is denied but you have not yet exercised your peremptory challenge, you may use it now. Arbitrators are charged to avoid even the appearance of a conflict of interest