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New Northwestern Clinic Protects Small Investor

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September 22, 2005 | by Pat Vaughan Tremmel

CHICAGO --- The stock market -- throughout the dramatic highs and lows of the 1990s and the uncertainties of a 9/11 world -- continues to attract an unprecedented and previously unimagined array of investors. A number of them are small investors with big problems with their securities transactions.

The new Investor Protection Center at Northwestern University School of Law’s Bluhm Legal Clinic, through funding from the NASD Investor Education Foundation, will address the legal needs of such investors in the Chicago area. The center will offer private representation to people with insufficient income or small claims, typically under $100,000, in resolving securities claims through arbitration.

At the same time, the Investor Protection Center will give Northwestern law and business students opportunities to work with clients on sophisticated legal problems. In the process, the center also is documenting its operations to provide a much-needed model for other schools of how to start such clinics.

“It’s a win-win situation for all involved,” said J. Samuel Tenenbaum, an experienced litigator and the director of the Bluhm Legal Clinic’s Investor Protection Center.

“Small investors will get services that are not readily available, if available at all, in the Midwest,” he said. “Students will get invaluable experience interviewing and counseling clients, explaining the arbitration and mediation process, investigating and selecting potential arbitrators, conducting discovery, negotiation settlements and participating in mediations and arbitrations. Regulators, including NASD and the SEC, as well as brokerage houses will get a screening mechanism to determine legitimate claims.”

The opening of the center follows an initiative by New York Attorney General Eliot Spitzer that resulted in the creation of nine investor protection clinics at law schools on the east coast. Before Northwestern’s Investor Protection Clinic opened, no such law school clinics existed from Pittsburgh to San Francisco, where there is one clinic.

“The need for an investor protection clinic in the Chicago area, a major financial center, with large exchanges and numerous brokerages houses  -- could not be more apparent,” said Tenenbaum. 

In its startup operations, the Northwestern center has reached out to a number of organizations, including the American Bar Association, to make its existence known to the public and created a Web site that allows potential clients to fill out a questionnaire that will begin the screening process for legitimate claims. The first related law school course will begin in the fall, though the center already is up and running.

All the documentation of the startup operations will result in a detailed manual for law schools interested in creating an investor protection clinic.

“By providing a roadmap for other law schools to follow, we hope to help increase the number of clinics handling these types of cases and give more investors with limited resources access to legal assistance in resolving their securities disputes,” said Robert R. Glauber, chairman and CEO of NASD and chairman of the NASD Investor Education Foundation.

The Northwestern center’s relationship to NASD is a plus, according to David S. Ruder, professor at Northwestern University School of Law and former chairman of the SEC. Ruder was chairman of the NASD’s Securities Arbitration Task Force that made recommendations to the NASD on “Securities Arbitration Reform.”

“The NASD’s investor arbitration program is a fair and efficient method for resolving disputes between investors and their brokers,” he said. “The Bluhm Legal Clinic’s Investor Protection Center will help to assure that increasing numbers of investors will have access to that fine program.”

The Web address for the Investor Protection Center at Northwestern University School of Law’s Bluhm Legal Clinic is www.law.northwestern.edu/investorprotection/ The telephone number is (312) 503-0210, and the e-mail address is Investor-Protection@law.northwestern.edu.

The Bluhm Legal Clinic at Northwestern University School of Law trains law students to be skilled, ethical and reform-minded professionals. Work done by Bluhm Legal Clinic students, faculty and staff emphasizes quality of justice and contributes to legal reform initiatives across the country. Students learn lawyering skills such as counseling, negotiating, writing, and appellate and trial advocacy. They represent clients now through the Investor Protection Center as well as the Children and Family Justice Center, the Center for International Human Rights and the Center on Wrongful Convictions.

The NASD Investor Education Foundation, established in 2003, supports educational programs and research with the goal of providing investors with high-quality, easily accessible information and tools to better understand investing and the markets.  The Foundation recently awarded more than $1 million to 11 organizations for new educational programs and research projects targeting the underserved segments of the population.  The foundation's grant initiatives complement NASD's own investor education efforts. For details about grant programs, applications, and other new initiatives of the Foundation, visit www.nasdfoundation.org.