U-5 defamation has been an issue for brokers since I began practicing law, and not much has changed to address the issue – except for U-5 filings to become absolutely privileged in New York.

I have had some successes negotiating U-5 language before the U-5 is filed, to stop a firm from causing further damage to the registered representative, but many of these issues arise after the broker has left the time, and there is no ability to discuss the language with the firm.

FINRA needs to do something about this. Perhaps a process for review of U-5s before they are filed and made public, giving the broker the opportunity to object and to have someone review the filing and the facts before the filing before it becomes part of the broker’s permanent record.

AdvisorHub has an excellent article on the issue – Defamation Wins Stack Up, But Tables Have Not Turned to Brokers’ Advantage, Lawyers Say

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