Firm's Control Your U-5

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Mar 29, 2007 4:21 pm


NY firms win absolute immunity for U-5s
By Dan Jamieson
March 29, 2007
The New York Court of Appeals today ruled that brokerage firms have absolute legal immunity from defamation suits arising from what they write on U-5 termination forms.

The case was widely watched among industry lawyers, and is a major victory for brokerage firms, which have long complained about the threat of suits from registered representatives.

In a 4-to-2 decision, the state's highest court said that the “U-5's compulsory nature and its role in the NASD's quasi-judicial process, together with the protection of public interests, lead us to conclude that [U-5] statements ... should be subject to an absolute privilege.”

The court compared filing a U-5 to making a complaint about a lawyer to a grievance committee. New York courts have found that confidential complaints about lawyers are absolutely privileged.

But in a dissent, judge Eugene Pigott said “statements made on a Form U-5 are not intended to be part of any court proceeding” and that U-5 information is “widely disseminated.”

Because of the “serious potential damage to an employee's reputation and business prospects ... the [U-5] is amply protected by a qualified ... privilege,” Mr. Pigott said.

The case was Chaskie J. Rosenberg v. MetLife Inc.

Calls to Mr. Rosenberg's attorney, Maurice Heller, of Heller Horowitz & Feit, P.C. in New York, and Steve Obus, a partner at Proskauer Rose LLP in New York, who represented MetLife, were not immediately returned.


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This is total BS...Firms can say whatever they want and we have no recourse.

Mar 30, 2007 8:15 pm

Bill,


Maybe, it's just because my meds haven't kicked-in yet, but: Ok, I understand that the B/D's can't be sued for defamation, but they can be sued to remove inaccurate U-5 info, can't they? Or am I missing something?


Where's that prescription...

Apr 2, 2007 12:36 pm

http://registeredrep.com/news/DefamedTough_Luck/