Leaders of the cantankerous gang of plaintiffs attorneys that represent investors seem to be turning on each other in a bizarre dispute with the regulatory arm of the

National Association of Securities Dealers

.

The general counsel of the

Public Investors Arbitration Bar Association

, a group of attorneys that represents investors in cases against brokerage firms in arbitration forums, Thursday issued a press release entitled: "NASD Caught Rigging Securities Arbitration Panels."

While such bombast is typical for plaintiffs attorneys, it is unusual that the release came in response to the PIABA president's agreement to let the NASD extend a testing deadline for an automated system to select the members of arbitration panels.

The general counsel, Stuart Goldberg -- who in the early 1990s produced a video called "Prudential-Bache's $1.3 Billion Energy Income Limited Partnership Oil Scam" -- told the NASD that PIABA President Mark Maddox had no authority to grant the extension. Maddox and Goldberg couldn't be reached for comment.

The NASD's reaction was to issue its own press release Thursday, calling the PIABA's statement "false" and "irresponsible" and demanding a retraction.

Now, while securities arbitration rarely is fodder for

HBO

original programming, the process is important to investors. For years, investor advocates complained that panels hearing cases often relied on the same small group of arbitrators, primarily retired professionals who used the stipend to make extra money and were reluctant to rule against the securities firms.

To remedy that situation, the NASD developed something called the

Neutral List Selection System

, which would employ a rotational system to choose arbitrators for cases. That's where this most recent dispute began.

At a demonstration of the selection system in late June, PIABA representatives asked the NASD representatives how the system could recommend arbitrators with specific knowledge of a product or issue, such as options and derivatives. Upon seeing that demonstration, the PIABA contingent was concerned that the so-called expertise function requests would yield the arbitrator names based on seniority, replicating the problem the NASD system was built to avoid.

To get additional time to determine whether the PIABA concerns were valid, NASD official George Friedman requested an extension to July 26 from Maddox. General counsel Goldberg, also a PIABA past president, had previously asked for a response by July 19.

That prompted Thursday's PIABA release claiming that the Neutral List Selection System would enable the NASD to maintain its use of arbitrators friendly to the industry. The release was issued by Goldberg, who rose to prominence in the mid-1990s as a one of a handful of lawyers who pursued limited-partnership cases against

Prudential Securities

, a scandal that resulted in total claims of more than $1 billion in damages against the firm.

The NASD, which can't afford damage to its reputation as it prepares for life as a for-profit entity, responded with a letter from its president, Richard Ketchum, to the PIABA board. "This disregard for the facts and the violation of the agreement combine to show that your press release was simply irresponsible," Ketchum's letter says.

It also included the information that the "perceived problem" with the expertise function "did not exist" and "does not choose arbitrators based on seniority when specific expertise is required."