Form U-5 Expungement
Zamansky & Associates increasingly is representing departing brokerage firm employees whose former employers improperly placed derogatory statements on their U-5 termination forms, potentially damaging their reputations forever. Often employers file false and defamatory Form U-5s against former employees for various reasons including retaliation, covering up for the missteps of higher ranking executives, or to limit a departing employee’s ability to lure customers. If evidence of “malice” or bad intent can be established, an employee is likely to prevail.
Firms are now being pressured to report everything to assure compliance with both U-4 and U-5 disclosures (The U-4 is the industry application form where other non-termination disclosures are made). Brokerage firms are increasingly disclosing the most tangential details that might amount to wrongful termination or defamation.
Unfortunately, there is no formal process where you can comment or dispute defamatory statements made on your U5 until after it is filed. Brokerage firm employees must vigorously pursue through arbitration employers who improperly make false, derogatory statements on a U-5 form. Even a simple “Yes” indicating a pending investigation at the time of termination can negatively affect a broker’s ability to find a new firm.