Form U5 Claims

Nationwide Representation in Form U5 Defamation Claims

FINRA’s Form U5 tracks, among other things, the employment history of registered representatives and the circumstances surrounding why a registered representee’s registration with a firm terminated. An inaccurate filing threatens your career in the financial services industry and may permanently put you at a disadvantage when seeking future opportunities.

Why should I care about the Form U5 filing?

Everything that appears on a Form U5 becomes part of your permanent record in the Central Registration Depository (CRD). The CRD is the database for your permanent record that is maintained by FINRA for all firms and registered individuals that work and otherwise participate in the securities industry.

The CRD database is accessible to regulators and securities firms. It is one of the primary sources used by firms to conduct background checks on potential employees. Importantly, some of the information maintained in the CRD database is also accessible to the general public through FINRA’s BrokerCheck web portal. As relevant to a U5 filing, you should know that based on the nature of the termination disclosure, the circumstances surrounding your termination may be accessible to the public on the BrokerCheck web portal.

FINRA member firms must file Form U5 within 30 days of the termination of a registered representative with a firm. Most importantly, the Form U5 discloses:

  • Whether the termination was voluntary or involuntary, and if involuntary, the reason for the termination; and
  • Whether the firm had an open investigation involving the registered representative at the time of the termination, and if so, the nature of the investigation.

Firms have a duty to report accurate information to FINRA on the Form U5. This duty is ongoing, so if a firm becomes aware of new information after they initially file the Form U5, they are required to amend it.

What should I do if I think I may be, or have been, terminated by my firm?

If you have reason to believe you may be, or if you have already been, terminated by your firm, you should immediately seek experienced counsel since the termination could result in a Form U5 filing that may impact your ability to obtain employment elsewhere. It could also lead to an inquiry from FINRA or a state regulator.

Counsel should evaluate the situation, provide you advise to the extent that you are still affiliated with your firm, and if you were terminated, seek to negotiate a Form U5 that will cause the least amount of damage to your reputation.

What if my Form U5 contains inaccurate information or is improperly published on BrokerCheck?

Any involuntary termination disclosure that is inaccurate may impact your ability to obtain future employment/affiliation. It may also impact the terms upon which a firm may offer you, and how a regulator, or subsequent firm, will handle an investigation relating to your conduct.

If the information is available on BrokerCheck, it will be accessible to the general public, which may impact the decisions people make on whether to become clients. It could also impact your employability and reputation outside of the securities industry.

It is thus important to address any inaccurate information contained on a Form U5 as soon as possible through experienced counsel who will try to work with your prior firm to change the Form U5. If that is unsuccessful, your next step is to file an expungement and/or defamation claim.

How is a Form U5 claim adjudicated?

For disputes involving FINRA member firms, Form U5 defamation claims are usually resolved via FINRA arbitration. If a non-FINRA member firm files the U5, the resolution would be handled through the language within the employment agreement, or in some cases through a state regulator.

In the claim, you will seek an expungement of the inaccurate Form U5 language. If successful, this will result in the accurate language replacing the inaccurate language. If the disclosure caused you damages or other harm, you can also include a defamation claim. In instances where the firm was reckless or knew that it was disclosing inaccurate information, many states allow for the recovery of punitive damages in addition to other damages.

The attorneys at Lewitas Hyman worked at the SEC, as in-house counsel at Morgan Stanley, at UBS and Everen Securities, and at some of the largest law firms in the world. They have represented firms and individuals in matters effecting the securities industry. They blend industry and regulatory experience when representative financial professionals in Form U5 disputes and other related concerns.

Headquartered in Chicago, we provide securities law counsel to clients nationwide. 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 us at (312) 291-4600 or through our online contact form to schedule a free consultation.