Generally, FINRA allows you upwards of 6 years to file a claim in arbitration to expunge your U5.
This is true of both removing customer complaints that should not be on your record and in removing false and defamatory information placed on your U5 by your last broker-dealer.
As you may know from previous blogs, defamation is made up of these 5 elements:
- A statement of fact;
- Published to a third party;
- The statement caused injury to your reputation;
- The statement must be false; and
- The statement is not privileged.
However, some types of false statements are considered so damaging that they are deemed defamatory on their face (“defamation per se“). This is different from “defamation per quod” where the false statement is not inherently defamatory and has to be evaluated in the context of additional facts.
Generally, for defamation per se, the statements are presumed harmful whereas for defamation per quod the damage must be proven.
Defamation Per Se and Untrue Statements About You
There are four types of untrue statements that the law presumes are harmful to your reputation and therefore actionable as an injury claim. If a statement doesn’t fall into one of these categories, you are required to prove your damages. If it does, damages may be presumed.
- Statements that you were involved in some kind of criminal activity;
- Statements that you have a “loathsome,” contagious or infectious disease;
- Statements that you have been unchaste or engaged in sexual misconduct; or
- Statements that you engaged in some manner of misconduct of your business, trade, or profession or were somehow incompetent at your job.
The last one is what you’re most likely to get on your U5, often in the form of tepid, chicken-shit expressions like, “Lost confidence of management,” or “Failed to perform in his/her role,” often also associated with some trivial issue that has nothing to do with investment-related statutes, regulations, rules, or industry standards of conduct.
So, such entries do nothing in terms of protecting the investing public, but simply blackball you from the securities industry altogether.
Adding a defamation per se claim to your overall U5 defamation case, assuming it’s supportable by the facts, can help your case a great deal.
Most states have a 1-year statute of limitations for such claims, however, so TIME IS OF THE ESSENCE. You should not sit on your rights and wait around in shock when you should instead speak with qualified counsel about your options. Generally, you have six years to get your U5 cleaned up, but you would do better to move quickly so you can include all actionable claims.
Call the Law Offices of Christopher H. Tovar, PLLC at (832) 370-3908.
