Wrongful Termination Defense

Termination and Defamation (Form U-5) Actions

Over the past three years, the securities industry has seen an unprecedented peak in broker turnover, and in transfers of whole teams of investment professionals from firms where they had remained for five years or more to new employers.

Securities industry employers are required by FINRA rules to file a Form U-5 update upon termination, for any reason, of an investment professional. The Uniform Termination Notice for Security Industries Registration, Form U-5, (not to be confused with the Uniform Application for Securities Industry Registration or Transfer, Form U-4). Whereas the Form U-4 contains more general information regarding the investment professional, including securities licenses, state registrations and the like, the Form U-5 is updated with pertinent information only upon termination, voluntary or otherwise, from a given position. Such information entered by the employer on the Form U-5 may in certain circumstances be of a negative nature, including statements relating to alleged misconduct by the broker or less than commendable reasons for dismissal.

The broker may disagree with the information as entered by the employer, and controversies of a legal nature may result. Brokers will bring claims of defamation, and seek amendment or expungement of what they consider false or libelous statements made about them on the Form U-5. Such claims are brought before FINRA arbitration panels. The arbitration panel must ultimately decide whether or to what extent what the ex-employer has entered on the broker's U-5 is true, and whether malice was involved. Such cases require securities lawyers, whether representing the broker-dealer or the investment professional, to have the investigative skills and knowledge particularly of the firm's compliance and supervisory structures, to quickly gain a thorough command of the salient facts and issues, and to educate the panel in generating the best outcome.

In such intra-industry matters, often more than in disputes between customers and brokerage firms, the level of discovery required and issues of credibility and other "intangibles" require trial advocacy skills rarely found in a more conventional law practice. Our industry backgrounds and work on behalf of brokers as well as broker-dealers make us uniquely qualified to help you resolve your U-5 matter in a way that saves you time and expense and helps you get back to business quickly.

Serving Michigan, Florida, New York and Texas.

Representing Broker-Dealers and Investment Professionals

The nationwide termination defense attorneys of Hertz Schram's Securities Team, which includes former compliance officers and broker-dealer general counsel, have direct and recent experience in U-5 issues, both from an industry standpoint, and from the perspective of representing brokers and investment advisors who have brought complaints before FINRA arbitration panels. Hertz Schram's Securities Team is adept at negotiating and crafting language for insertion in the Form U-5 as to avoid subsequent legal ramifications from disgruntled employees while still complying with firm policies and regulatory requirements.

Call for an Initial Consultation

Contact our office today to discuss your Form U-5 questions with one of our Michigan defamation attorneys. You can reach us by phone at 248-494-4486 or via e-mail.