DSA found that arbitrators sided with brokers in the majority of cases, finding that the employment termination U5 forms contained false, inaccurate and/or defamatory information. However, even when arbitrators found the information defamatory, they rarely granted damages to the broker.
The story also delved into the Cebert v Morgan Stanley employment dispute in which DSA president, Alison Jimenez, provided expert analysis of U5 termination filings. Arbitrators awarded Mr. Cebert $2.4 million dollars and found that the firm made defamatory statements to the advisor’s clients “in at least a grossly negligent manner (if not with a self-serving, malicious move) … that defamed or were intended to defame [Cebert] in the minds of his customers.”
DSA president quoted in Bloomberg article:
Because those penalties and big damage awards like Cebert’s are rare, firms could look at the overall costs and decide that filing inaccurate U-5s are a “cost-effective business decision,” said Alison Jimenez, the president of Dynamic Securities Analytics, a securities research firm that has studied recent Finra employment disputes.
See DSA’s other securities employment analysis: