The number of cases filed with the NASD Dispute Resolution Arbitration Forum jumped 24% in 2001, an increase of almost 1,400 cases, according to the NASD’s year-end statistics, which was announced today.
The 1,400 cases is a NASD record.
The most common allegations made, according to the NASD, were negligence, misrepresentation, unsuitable recommendations, and failure to supervise.
"Both investors and firms used NASD Dispute Resolution in record numbers in 2001, and we are pleased that our arbitration and mediation forums remain important tools for investors and firms to use to settle disputes," Linda Fienberg, President of NASD Dispute Resolution, said in a statement. "While 2001 has raised the bar for our organization, our roster of quality arbitrators and mediators combined with technological advances, has allowed us to continue to process cases fairly and efficiently."
The 2001 statistics show that 7,088 new claims were filed, up from 5,725 in 2000. Of the 7,088 cases filed, 6,915 were filed as arbitration claims and an additional 173 began as mediations. The number of claims involving mutual funds increased by more than 100% over the previous year.
In cases filed by investors, arbitrators awarded damages in 2001 of $97 million, $15 million of which was for punitive damages, compared to $76 million and $21 million, respectively, in 2000. However, more than 60% of all claims were resolved between the parties before reaching an arbitration award.
In 2001, the mediation forum closed 1,262 cases with 77% of the cases reaching an agreement. In the past six years, parties have used the mediation process in over 6,000 cases with approximately 80% resulting in an agreement between the parties.