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Have You Been Subjected to an Erroneous or Defamatory U5?
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| 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.
READ: FINRA's answers to Frequently Asked Questions concerning the FINRA arbitration process.
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.
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.
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.
Philadelphia Area U5 Attorney Representing Employee Brokers in Arbitration Against Employer Securities Brokerage Firms
Questions?
We 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.
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.
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.
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| Requires U5 be Filed in all Cases of Involuntary Separation from Employment |
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.
May a Broker Who Believes that he/she has been Subject to an Erroneous, Misleading or Defamatory U5 File an Arbitration Claim with FINRA?
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| 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?
 |
| 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.
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If you
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