U5 Hazard

Published Monday, October 01, 2007

Brokerage firms can say anything they like on a departing broker's Form U5, even if it's defamatory in nature — and untrue. That's because the New York Court of Appeals ruled in Rosenberg v. MetLife Inc. that brokerage firms were entitled to an “absolute privilege” for the statements they place on the U5 of a departing registered representative. The idea is to protect the investing public against rogue reps. Without absolute privilege, dinged reps would file libel suits. But lawyers who represent advisors say the ruling, which only applies to the state of New York but sets an ...

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