The Financial Industry Regulatory Authority (FINRA) requires brokerage firms to file a Form U5 reporting the termination of a registered representative’s employment, along with the reasons for such termination within 30 days of the event.

This is an important regulatory requirement for the protection of investors that is sometimes abused by a brokerage firm through false answers and defamatory explanations on the Form U5 in retaliation to a broker’s departure from the firm’s employment, to avoid competition, and minimize the loss of customers.

Notwithstanding the importance of this notice, the attorneys at The Law Offices of Robert Wayne Pearce, P.A. will not stand by and let this process be abused by any brokerage firm when it comes to its broker and investment advisor clients located throughout the country.

What is FINRA Form U5?

What is an SEC Subpoena?

FINRA Form U5 is the Uniform Termination Notice for Securities Industry Registration. It is filed by broker-dealers, investment advisors, or issuers of securities to report the termination of registered individual. The form must be filed within 30 days of the termination.

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Note: If you’ve been wronged by a false or misleading U5 filing, you may have legal recourse. Speak to an experienced securities attorney who represents brokers and advisors to discuss your case.


Defamation occurs when the brokerage makes a false statement; the statement is defamatory, meaning, in this context, it is a statement on the Form U-5, generally in the “explanation” section, that affects your business reputation; it is published on BrokerCheck and available to the world through the internet; the statement is made either negligently or recklessly; and you are harmed. 

Can You Pushback Against a FINRA U5 Defamation Filing?

What is an SEC Subpoena?

If your reputation was damaged by an inaccurate FINRA Form U5 filing, you may have grounds to file a defamation lawsuit. A broker has the legal right to dispute the disclosures made by their former brokerage firm, especially if they feel the information is false or misleading.

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The brokerage firm must indicate on the Form U-5 whether the broker left voluntarily, was permitted to resign or was discharged.  If their reason was other than voluntary, a brief explanation must be provided. The firm is required to state whether the broker, while employed: was involved in any disciplinary action; the subject of certain investment-related, consumer initiated complaints; was convicted of or pled guilty or nolo contendere (no contest) to a felony or certain misdemeanors; was the subject of a governmental or self-regulatory organization investigation; or was under review by the firm “for fraud or wrongful taking of property, or violating investment statutes, regulations, rules, or industry standards of conduct.” The threat of “yes” answers and false explanations on the Form U-5 have been made by brokerage firms to deter early departures, discourage solicitation of clients at the new firm, extort repayment of up-front bonuses, and other nefarious activities. The explanation section of the Form U-5 has also been abused by firms to discourage the prospective employer from hiring brokers, trigger unwarranted FINRA investigations to delay registration, thwart competition, and for retaliation, solely. These false statements and explanations will permanently be on your record and could harm your career. 


Once the Form U-5 is filed, the only way that you can get rid of that false and defamatory remark is by filing an arbitration claim against the broker-dealer for defamation. Now depending on where you reside, there are obstacles that must be overcome. 

If you live in New York or California, the courts have held those remarks on the Form U-5 to be “absolutely privileged;” your former employer has “absolute immunity,” and while it may not be sued for defamation damages, you can still sue to have the false and defamatory remark expunged from your record. However, with the right lawyer representing you in those states, there other claims that could be filed for that misconduct to recoup your damages.

The majority of states (Arizona, Connecticut, Florida, Hawaii, Idaho, Illinois, Kansas, Maine, Michigan, Minnesota, Missouri, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, and Vermont) hold that those statements on the U-5 are only “qualifiedly privileged,” meaning that if they were not made in “good faith” and with “a reasonable basis,” then they are not protected and you can sue for both damages and expungement.

The brokerage firm defenses are generally: 1) the statements are true; 2) they were made in good faith and not maliciously or recklessly; and 3) they are barred by statutes of limitation, which can be as short as one year in some states.

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Generally, brokers will get advance notice about what is going to appear on the U-5 before it is filed. The brokerage firm’s registration department has 30 days to file the document. You have a very small window of opportunity after your employment is terminated to hire an attorney, get that attorney to speak to your former employer, and deter the firm from making your life miserable and causing you the expense of an arbitration to clear your record. If you wait, the regulators will have seen the Form U-5 and possibly hold up your registration.  If your prospective employer has seen the disclosure, it could possibly withdraw the offer of employment. 

You need to act very quickly when you are terminated from a broker-dealer and receive a draft of the Form U-5 that is going to be filed. If it is false, if it is defamatory, you need to act quickly and hire an attorney who can hopefully talk the broker-dealer out of making a mistake, protecting your CRD and your BrokerCheck without having to file an arbitration.

You should consult with an attorney who is knowledgeable of FINRA rules, practices, and procedures and who possesses the skills necessary to deter firms from making any such statements on the termination notice and recover any damages to the extent they exist. Attorney Pearce has over 40 years of experience with FINRA arbitrations and successfully deterring employers from defaming his clients and, if necessary, asserting and proving defamation claims.

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The Law Offices of Robert Wayne Pearce, P.A. understands what is at stake in matters involving Form U-5 abuse and defamation problems for brokers and investment advisors. We constantly strive to secure the result most favorable to our clients. Contact us online or by telephone Attorney Pearce toll free at 800-732-2889 for your Free Consultation.