Whistleblower Law Blog

The Employment Law Group® Law Firm Establishes that Statements on U-5’s Are Not Absolutely Privileged

On July 23, 2008, an arbitration panel of the Financial Industry Regulatory Authority (FINRA) held, for what appears to be the first time in Washington, DC area, that when a brokerage house says why it terminates a regulated employee it is not immune from suit.  In his complaint, a broker alleges that his former employer gave an untrue reason on his form U-5 for why it terminated his employment.  In this case, the employer denied any wrongdoing and moved to dismiss the broker’s defamation claim, arguing that it was immune from suit as any alleged defamatory statements it makes to FINRA on the U-5 are absolutely privileged.  In siding with the former employee to allow the claim to proceed to a determination at hearing, the FINRA panel embraced the position of the sixteen states that have enacted Section 507 of the Uniform Securities Act and rejected the position of New York’s highest court articulated in Rosenberg v. Metlife Inc., 8 N.Y.3d 359, 866 N.E.2d 439, 834 N.Y.S.2d 494 (2007).  The broker is represented by R. Scott Oswald and Adam A. Carter of The Employment Law Group® law firm.


decorative line