SEC Considers Controversial TRO Rule

In April, the SEC issued for comment a hotly contested proposed permanent rule governing how injunctions against brokers can be obtained.Firms sometimes seek emergency relief to prevent departing brokers from soliciting and transferring customers. Merrill Lynch is the most active firm requesting these temporary restraining orders (TROs), or injunctions.An NASDR pilot program that mandates expedited

In April, the SEC issued for comment a hotly contested proposed permanent rule governing how injunctions against brokers can be obtained.

Firms sometimes seek emergency relief to prevent departing brokers from soliciting and transferring customers. Merrill Lynch is the most active firm requesting these temporary restraining orders (TROs), or injunctions.

An NASDR pilot program that mandates expedited arbitration in TRO cases is now in its fourth year. A permanent rule on how to handle these tussles has been postponed four times.

The latest version of the proposed permanent rule would end the NASDR's injunctive option. A limited arbitration to decide further injunctive relief would be required within 15 business days.

Ending NASDR injunctions is controversial because firms have been less successful in getting TROs from arbitrators.

At press time, the proposal (File No. SR-NASD-00-02) had not been posted to the SEC's Web site. See the Federal Register or www.rrmag.com for the full text.

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