Good morning, and thank you for the opportunity to submit testimony on behalf of the National Organization for Women, the largest group of feminist activists in the United States. Since NOW is dedicated to ending discrimination of all kinds, we have a keen interest in ending mandatory arbitration of women's rights and other civil rights disputes.

Today you will likely hear a lot of detailed discussion about the merits vel non of mandatory arbitration, what is required by justice versus what is allowed by the Supreme Court, the Congress and the constitution. I believe that the arguments about the flaws in the current securities industry system are well-known and, in any case, can be better presented by others. I want to concentrate this morning instead on the direction and the consequences of the debate for the industry.

As a result of legal and political changes since 1991, the glare of public attention is being focussed on this practice and on this industry. Public opinion is moving to the conclusion that mandatory arbitration is not appropriate in employment discrimination cases, and continued efforts to maintain it are unwise and unproductive for the industry.

CIVIL RIGHTS POLICY SINCE 1991

At the same time, Congress passed the Civil Rights Act of 1991, which for the first time gave women and people of color a right to a trial by jury and damages in employment discrimination cases under Title VII of the 1964 Civil Rights Act. Consistent with the thrust of the earlier law, the 1991 act provided not only compensatory damages as a remedy for the employee, but also punitive damages as a strong deterrent for employers.

All of this took place in the immediate aftermath of Anita Hill's confrontation with the U.S. Senate Judiciary Committee and the unprecedented national dialogue about sexual harassment and discrimination.

These changes dramatically, perhaps irrevocably altered the atmosphere around employment discrimination against women. Now, under the new law, when employees have discrimination complaints, most count on an impartial judge and jury of their peers to hear their arguments and mete out justice.

But the new law's provision also raised the stakes for employers and gave them new incentive to seek ways around it. Increasingly, we see other employers looking with envy at the securities industry's system of mandatory arbitration which denies employees their rights to a trial by jury and damages. Employers as different as JCPenneys and Hooters are now trying to impose this unfair system on their employees as they ask, not unreasonably, why it should only apply to securities firms.

Because of recent high-profile complaints against brokerage firms, NOW has turned more attention to securities industry practices, and we have reached this conclusion: Mandatory arbitration effectively guts the civil rights laws and allows the securities industry to lag behind other professional fields in hiring, working conditions and promotion of women and people of color. We are not about to let it persist and spread without a major, public fight.

Continued, vigorous defense of its mandatory arbitration system can only bring additional unwanted scrutiny to the securities industry. It invites more high-visibility, class-action lawsuits as a way around arbitration, and it has the potential to shake public confidence in the fairness and the judgment of an industry that depends on the trust of potential investors.

In short, it is in the best interest of the firms as well as the employees in the securities industry to bring a swift and just resolution to this conflict by acknowledging that employees are entitled to the full benefits of the nation's equal employment opportunity laws.

ARBITRATION OVERHAUL IS LONG OVERDUE

Mandatory arbitration can also cost corporations more money. Since the only way women and people of color can have their day in court is to form a class and sue, companies -- like Smith Barney -- face costly class-action suits in federal court. Pamela Martens -- the lead plaintiff in the Smith Barney litigation -- never would have initiated a class action if she could have had her day in court. Ultimately, even billion-dollar Wall Street companies will benefit when the arbitration is an option -- not a mandate.

If proponents of arbitration are correct in their belief that it is faster, cheaper and better than the judicial system, then surely employees and their attorneys will opt for arbitration in a voluntary system. However, those plaintiffs who wish to file their complaints in a court of law, to be heard before an impartial judge and jury of peers, must not be denied that opportunity. To do so undermines the civil rights laws and mocks the work of suffragists, abolitionists and civil and women's rights activists.

The National Organization for Women will not rest until arbitration is optional for employees in the securities industry -- and in every industry. We challenge the NASD and its member organizations to take the lead and set the example by removing the arbitration requirement from the Form U-4 and all employment contracts.

Thank you.