U5 Comments Give Big Firms an Unfair Club

Getting the discharge "heave ho" for not even a technical rule violation, I was discharged from Merrill Lynch. It was bad enough to lose my deferred comp, bonuses and almost my entire $50 MM book, but I lost the right to get another job at a big wirehouse due to the unfair U5 comments left by Merrill Lynch. I also think about the injustice all the time and feel helpless.

The U5 in my case was used to comment on what Merrill termed an internal rule violation, which I contend was not a violation at all. This U5 stain on my record subsequently led to the entry on my U4 as a "yes" on the form which in turn got me a NYSE suspention and censure, 2 years later. It cost me about $2,000.00 in legal fees to boot to get censured.

All this for e-mailing a legal company attachment in a marketing campaign. The e-mail attachment piece which was mailed complied totally with the legal department of Merrill Lynch and contained all the legal disclaimers. The piece was for general distribution. They said I didn't get approval to mail it out to my sales leads. Ironically, several years ago before getting discharged, I attested to a Merrill Lynch rule on correspondence which stated that it was the senders discretion, that is the registered reps discretion as to content and that e-mails are an important business tool. Who would think an approved mailer would get me fired?

Things have gotten worse. Especially in New York. The current state of the case law in Chaskie Rosenberg v Met Life U5 defamation case was appealed to the New York appellate court which stated that no legal recourse for a defamation suit could arise against a company from a company's U5 comments regardless of the inflammatory nature of the comments. Chaskie got nothing for his efforts but the "shaft" and probably paid the lawyer the "kid's education" for the loss.

This confirmed absolute protection for the firm who writes comments in the U5. The parting shots are indellible as they never are erased by time. They can be challenged by an NASD arbitration, however, have you seen the rates lawyers charge today? Try $300 to $700 per hour. Who can afford to go to an arbitration, let alone prepare for one when you are severely weakened financially in the first place?

Svigos v Merrill Lynch is an exception as Svigos beat Merrill for $2,200,000.00 including legal fees for this Illinois broker's illegal firing from Merrill Lynch. I would say he had a great attorney and a good deal of luck.

Most states have "at will" employment laws which drastically favor the employer since "no good reason" is necessary to fire a broker.

The U5 has been said to be fashioned by some big firms to steal the books of departing registered reps fired for the "no good" at will law reasons. "That will teach them a lesson"! " Let me take your clients you busted your chops to acquire"!!

If you have any experience with Merrill Lynch or U5 defamation or got fired for writing e-mails please blog here.