U-4 & U-5 Violations
U-4 and U-5 violations are false or defamatory statements a brokerage firm makes on a broker’s registration or termination forms, which follow the broker on BrokerCheck for the rest of a career. Tracy Pride Stoneman represents registered representatives in these claims in FINRA arbitration nationwide.
By Tracy Pride Stoneman, securities arbitration attorney Updated
| What happened | Rule or law | How it is proved |
|---|---|---|
| A false or defamatory reason for termination on the Form U-5 | FINRA By-Laws Article V, Section 3 (the U-5 is due within 30 days and must be accurate); FINRA Rule 2010; state defamation law | The U-5 itself, the internal termination memo, the Section 7F disclosure answers |
| Firm refuses to amend a U-5 it knows is wrong | By-Laws Article V, Section 3(b) (duty to amend) | Post-termination correspondence and the firm’s reasons for refusing |
| Disclosures placed on the U-4 without basis | FINRA Rule 1122 (filing of misleading information); Rule 2010 | The Form U-4 history as shown on BrokerCheck |
| Remedy | FINRA Rule 2080 (expungement) with a court order confirming the award; compensatory damages for lost income | The panel’s expungement recommendation and the damages record |
A FINRA panel can award compensatory damages (out-of-pocket losses or market-adjusted “well-managed account” damages), interest, costs, attorney’s fees where a statute or contract allows them, and punitive damages in egregious cases. Claims must be filed within six years of the events under FINRA Rule 12206, and shorter state statutes of limitation may also apply.
If any of this sounds like your account, the next step costs nothing: a free, honest evaluation. Tell me what happened or call (719) 783-0303.
Common questions
U-4 & U-5 Violations: what clients ask
What is a Form U5?
When a broker leaves a firm, the firm files a Form U5 stating why. The information becomes part of the broker's public record on FINRA BrokerCheck and is seen by every future employer.
Can false information on a U5 be corrected?
Yes. A broker can bring a FINRA arbitration claim seeking to amend the U5 and, in some cases, damages for defamation. Expungement of customer complaints is a separate FINRA arbitration process.
Is there a deadline?
Yes, and it can be short. Defamation claims in particular often have brief limitation periods, so a broker should act quickly after an inaccurate U5 is filed.
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