Arbitrator Update

July 2010 Issue

Table of Contents:

Arbitrator Profile: Carole Bovard

Updated Code of Arbitration and Member Arbitration Rules

Staffing Update

Arbitration Statistics

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Arbitrator Profile: Carole Bovard

In this issue, NFA features industry arbitrator, Carole Bovard, who joined NFA's roster of arbitrators in 1993. Since that time, Carole has served on many cases and she often assumes the role of panel chairperson. Carole has an abundance of experience, both within the futures industry and outside of it. As a result, she brings a unique set of skills to the table each times she serves.

Carole began her career as a Market Surveillance Analyst at the CBOE and went on to become an investigator at the CME.  While at the CME, Carole worked with NFA in preparing background information for CME arbitration panels.  From there, Carole became General Counsel at Lind-Waldock & Company where she remained for over 6 years.  These experiences enabled Carole to gain firsthand knowledge of the leadership and professional insight that NFA brings to the industry, and she realized she wanted to be part of it.  Since she was particularly interested in the dispute resolution process, she became an arbitrator and eventually pursued a mediation certificate.  Today, Carole practices law with a focus on corporate formation and contracting for a variety of start-up companies and feels her service as an arbitrator has strengthened her skills in these areas.  
  
Over the years, Carole has gained valuable insight into the arbitration process.  She strongly believes cases that involve issues or transactions that require specialized knowledge lend themselves to arbitration.  She understands that arbitration should be a faster and more economical alternative to litigation even in large, complex cases.  However, she finds that these goals often compete with the due process standards, which makes ruling on discovery requests challenging.  Carole meets these challenges head on and never loses sight of the fact that the parties must feel they were afforded every opportunity to fully prepare and present their side of the dispute.  

In her role as chairperson, Carole strives to keep the arbitration process running smoothly and has a few words of wisdom to share.  If contentious parties are interfering with the hearing's fairness or efficiency, Carole reminds them that the hearing is an affirmative step toward resolving their dispute.  She has found that this generally goes a long way in getting the proceeding back on track.  Carole also suggests that panel members take the time to become acquainted with one another's strengths and prior panel experience because the dynamic of the panel and the level of respect they show one another can play a significant role when disagreements among the parties arise.  "The professional demeanor of the chairperson and the panel will set the tone for the conduct of the parties and their counsel throughout the arbitral process." 

Overall, Carole enjoys helping people resolve their disputes and finds serving as an arbitrator rewarding.  "Justly and efficiently resolving parties' disputes that they had been unable to settle is the most rewarding aspect of serving as an arbitrator."  

NFA recognizes that the strength of our system is based in large part on the quality of our arbitrators. We have managed to be successful because of the time our arbitrators devote to the process and the knowledge they bring to the table, and we appreciate all the hard work Carole has put in over the years. 
  

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Updated Code of Arbitration and Member Arbitration Rules

NFA recently amended its Code of Arbitration (Code) and Member Arbitration Rules (Rules) to modify the monetary thresholds used to determine the proceeding type and number of arbitrators NFA appoints to a case. These changes are summarized below.

Prior to October 2009, cases with claim amounts less than or equal to $15,000 were automatically processed as summary proceedings. In addition, customer cases between $15,000.01 and $25,000 and Member cases $15,000.01 and $50,000 were processed as summaries, unless one of the parties requested an oral hearing. Summary proceedings have proven to be an effective method of resolving disputes. They are less costly to the parties and NFA and they are resolved more quickly than cases requiring an oral hearing. Therefore, in order to ensure more cases are processed as summary proceedings, NFA amended the Code and Rules as follows.

All cases filed on or after October 1, with claim amounts less than or equal to $25,000 are processed as summary proceedings. In addition, all cases with claim amounts between $25,000.01 and $50,000 are processed as summaries unless a party requests an oral hearing.

NFA also increased the threshold for three arbitrator panels under the Code. Prior to October 2009, customer claims between $25,000.01 and $50,000 were heard by one arbitrator unless a party requested three. Under the Rules, however, the range was $50,000.01 to $100,000. Appointing one arbitrator instead of three simplifies the arbitration process and reduces costs. Therefore, NFA amended the Code so that it is consistent with the Rules.

All cases filed on or after October 1, with claim amounts between $50,000.01 and $100,000 are heard by one arbitrator, unless a three arbitrator panel is requested. The requirements for the request have also changed. In the past, NFA appointed three arbitrators to a matter if one of the parties made the request. Now, however, all of parties must agree that a three arbitrator panel is necessary.

For additional information regarding these rule changes, please see the link below or contact the Arbitration Department at 877-731-5300.

http://www.nfa.futures.org/news/newsNotice.asp?ArticleID=2355

Staffing Update

The Arbitration Department recently added two "new" staff members to the mix. Susan Day rejoined NFA's Arbitration Department as a Senior Case Analyst in March 2010. She left NFA in November of 2006 to relocate to Florida with her family. Susan brings approximately 8 years of experience with her to the department. You may contact Susan at 312-781-1426 or sday@nfa.futures.org.

Leah Thigpen joined the Arbitration Department as a Case Analyst in June 2010. Leah began her career with NFA in January 2004 as an Information Center Representative. From there, Leah joined the Compliance Department as a Disclosure Document Analyst. In addition to working full-time, Leah attends The John Marshall Law School and will obtain her JD in May 2011. You may contact Leah at 312-781-1218 or lthigpen@nfa.futures.org.

Please join us in welcoming Susan and Leah to the Department.

Arbitration Statistics

Over the past couple years, arbitration filings have been on the rise.  In 2009 the department received 225 arbitration claims, which is slightly higher than the number of claims we received in 2008.  The upward trend seems to have subsided however, since filings are down in 2010.  

The department closed 214 cases in 2009.  40% of those cases were either rejected or withdrawn and 34% were closed because the parties settled.  The remaining 26% resulted in an oral hearing or summary proceeding.  

You will see from the chart below that NFA conducted 28 oral hearings in 2009.  Of those hearing, 10 were held in Illinois, followed by five in Florida and four each in California and New York.  The remaining five cases were split between Colorado, Georgia and Michigan.

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