Financial Industry Regulatory Authority arbitrators sided with a former J.P. Morgan Securities broker in his defamation claim, according to AdvisorHub.
Ruling in the case of New York City broker Michael C. Nolan, the FINRA panel ordered J.P. Morgan to pay $250,000 in damages. Nolan also won the right to have his record expunged of what he said were defamatory allegations by the brokerage firm following his departure.
Nolan said J.P. Morgan defamed him in the U5 document that detailed his separation from the firm in 2022.
FINRA’s Form U5 tracks, among other things, the employment history of registered representatives and the circumstances surrounding why a registered representative’s registration with a firm was terminated. Everything that appears on a Form U5 becomes part of a representative’s permanent record in the Central Registration Depository.
After 31 years at J.P. Morgan, Nolan resigned in September 2022 and joined RBC Capital Markets. He managed $1 billion in client assets at the time.
In its Form U5 filing, J.P. Morgan stated that Nolan was being reviewed internally for allegedly “sharing material non-public information with a client; failing to properly disclose his personal affiliation with an outside business interest prior to requesting information from firm resources regarding the outside interest; and violating the firm’s policy prohibiting the use of unapproved electronic communication channels for business communications.”
Nolan claimed in his complaint with FINRA that the allegations, which appeared on his BrokerCheck report, were “untrue, anticompetitive and defamatory.” He said that he provided the bank with “evidence of the falsity of the allegations long before it made these statements, and [J.P. Morgan] chose to make them solely to damage my reputation.” He said the claims interfered with his ability to prospect customers at RBC and also violated FINRA Rule 1122 prohibiting the filing of misleading information
The three-member panel of FINRA arbitrators ordered that Nolan’s record be revised to identify his departure as “voluntary” and note there was “no violation of internal policies.”
The financial settlement was far less than Nolan had been seeking. He sought $5.2 million in compensatory damages; $1 million for emotional distress; and $555,000 in legal fees, including fees/costs incurred during the bank’s internal investigation. He also had requested “up to 10 times the amount of compensatory damages and punitive damages.”
An inaccurate Form U5 filing threatens your career in the financial services industry and may permanently put you at a disadvantage when seeking future opportunities. If you are concerned that you may be, or if you already have been, terminated from your firm, or if you believe you have inaccurate information on your Form U5, we invite you to contact Lewitas Hyman at (888) 655-6002 or through our online contact form to schedule a free consultation.
