Ethical Standards are promulgated by the California Judicial Council which require strict disclosures that NASD doesn't agree to. In reaction, NASD actually stops all NASD arbitrations in California rather than comply, then gets it own rules changed to require NASD registered employees to agree to waive the California rules or go outside California to arbitrate. Caught in this fight is employee Grunwald who would prefer to arbitrate in California under the California ethical standards. The issue ends up before the 9th Circuit. Who wins?
The smart money would be on Mr. Grunwald given the Court's general hostility to arbitration. But in this case the smart money would be wrong. According to the 9th Circuit, with one reluctantly concurring member, the NASD statutory scheme pre-empts the California standards.
One interesting, but unanswered, question raised by Grunwald - is an individual entitled to a "speedy and expeditious" arbitration under the FAA? Thank goodness the Court had the good sense not to answer that one unnecessarily.
Arbitration: NASD Rules v. California Ethical Standards for Neutral Arbitrators
Appearing in the 9th Circuit is this battle of titans - in one corner the arbitration rules of the NASD that all brokerage employees are required to agree to versus the California Ethics Standards for Neutral Arbitrators in Contractual Arbitration promulgated by the California Judicial Council. Although if you really enjoy such issues you should check out the full 61 pages of the majority and concurring opinions in Credit Suisse First Boston Corp. v. Grunwald (9th Cir. 3/1/05) [pdf], here's a short hand rendition of what happened.