Sunday, August 6, 2017

Securities Broker Disputes under FINRA Dispute Resolution Arbitration – U5 Defamation Claims

Have You Been Subjected to an Erroneous or Defamatory U5?


U5s Can be Devastating to a
Securities Broker's Future Career Prospects
To Be Avoided Where Possible
The law requires that a Form U5 be filed any time a securities broker-dealer is involuntarily separated from his/her employment with a securities firm. This creates a difficult situation for both the firm and the broker.



Click Here to jump to FINRA's answers to Frequently Asked Questions concerning the FINRA arbitration process.

Securing Justice for Pennsylvania's Workforce
Questions?  John will spend 5-10 minutes with you discussing your current work situation, your termination, your non-compete agreement, your wage claim, your U5 dispute, your unemployment claim and/or your potential lawsuit at no charge to you.  

Call 610-647-5027.  John is usually available 24/7.

You may also Click Here to e-mail John directly.

Employer Brokerage Firms Must File a Form U5 if they Terminate an Employee Securities Broker or Permit a Broker to Resign in Lieu of a Termination

If you are a securities broker threatened with the involuntary loss of your employment with a securities firm you may be subjected to the filing of a U5. This is not a good thing at all.

A U5 is a statement that must be filed by a brokerage firm when a broker dealer is involuntarily separated from employment with the firm.





A Form U5, formally known as a “Uniform Termination Notice for Securities Industry Registration,” is required pursuant to article V, section 3 of the FINRA By-Laws. U5s are known to create serious problems for securities broker seeking new employment.

What Does a Form U5 Filed by a Securities Brokerage Firm Pursuant to FINRA Contain?

A broker is involuntarily separated from employment on the motion of the employer brokerage firm, the U5 must indicate one of the following reasons for the separation: 1) discharged; 2) permitted to resign; or 3) other.  See FINRA Regulatory Notice 10-39.

FINRA requires that a U5 must be filed no later than 30 days after the brokerage firm terminates an associated person’s employment, and hence his/her registration with the firm.

Requires U5 be Filed in all Cases of Involuntary Separation from Employment 
In the case of an involuntary separation such as described above, the member firm must explain the reason behind the separation, the most benign of which is likely “did not meet job expectations.” In addition, the employer must state whether the basis for the termination was securities related, that is, whether the departing broker was subject to some sort of an investigation or proceeding by a governmental body or a self-regulatory organization such as FINRA. Of course, if there was some sort of criminal investigation, arrest and/or conviction associated with the termination, this must be disclosed as well.

Finally, the employer must specify whether the was any sort of customer complaint relating to the individual, whether there is/was any type of litigation related thereto and the status/outcome of such litigation.

FINRA Regulatory Notice 10-39 Explains Nuts and Bolts

Must a U5 be Filed if a Securities Broker Voluntarily Resigned from his/her Employment?

Any case of involuntary separation, even a “permitted to resign” (code for – “was about to be fired”) must result in a U5 and any such U5, no matter how benign, can at the very least be quite limiting, and sometimes nearly lethal, to an employee broker’s future employment chances.

Therefore, if you believe that you are approaching involved in a situation which could result in your ultimate termination, it is best to contact counsel at once. Sometimes, a voluntary resignation is the best course. While a U5 must be filed where there is a voluntary resignation, my experience has been that it does not create a serious impediment to future career opportunities.

Broker Claims Valued at over $100,000
Heard and Decided by Panel of 3 Arbitrators
May a Broker Who Believes that he/she has been Subject to an Erroneous, Misleading or Defamatory U5 File an Arbitration Claim with FINRA?

Absolutely – and large arbitration awards have been rendered in numerous such circumstances.  Consequently, if you are broker who believes that you have been subjected to an erroneous, misleading or defamatory U5, contacting counsel is wise. In such situations, one can initiate an arbitration with FINRA and the remedies can be substantial if the member firm is found to have engaged in the publication of an improper U5


Arbitrations Can Be Complex and Astute Lawyering is a Must
That said, arbitrations, although slightly less formal than judicial proceedings, are particularly nettlesome for the uninitiated.  They can be expensive to initiate and litigate, involve very precise pleading requirements, are adjudicated in accordance with quite specific guidelines, involve minimum pre-hearing discovery and are adjudicated by arbitrators with a substantial level of expertise in the subject matter. 

A FINRA Arbitration Panel has the Power to Award an Aggrieved Broker Dealer Monetary Damages and Expungement of an Erroneous or Defamatory U5

A Broker Dealer who prevails in an arbitration against a Securities Firm may be entitled to substantial compensatory damages and, perhaps as importantly, to an award of expungement of the offending U5.  However, such arbitrations are complex, and the remedies to be obtained must be set forth with specificity in one's Statement of Claim submission at the outset of the proceeding.


Representing Pennsylvania Employees
Since 1991
Philadelphia Area U5 Attorney Representing Employee Brokers in Arbitration Against Employer Securities Brokerage Firms

JohnA. Gallagher is an employment lawyer who represents employees in Pennsylvania. 

John typically represents workers who need an employment lawyer in Philadelphia County, Chester County, Delaware County, Bucks County, Berks County, Lancaster County and Montgomery County.

Pennsylvania Securities Employment Attorney Provides Free Telephone Consultations (15 Minutes in Duration)

If you are looking for a lawyer to evaluate your Form U5, and live in Malvern, Wayne, King of Prussia, Downingtown, Glenside, Doylestown, Radnor, Newtown Square, Exton, Philadelphia, West Chester, Skippack, Langhorne, Haverford, Nether Providence, Broomall, Drexel Hill, Reading or any of their surrounding towns, feel free to send me an e-mail or give me a call.  I am always glad to spend some time with people via a free telephone consultation.

Need an Experienced Lawyer for a FINRA Arbitration Involving a U5 and Located in the Philadelphia Area?

Click Here if you have questions about any aspect of employment law, from wrongful termination, to wage and overtime claims, to discrimination and retaliation laws, to U5 defamation claims, to Family and Medical Leave

Thanks for checking in with us.

No comments: