A New York Court of Appeals held that an employer’s statements on a Form U-5 are protected by an absolute privilege barring defamation claims. As a member of the National Association of Securities Dealers (“NASD”), Metlife was required to file a Form U-5 to document the reasons for the discharge of Chaskie Rosenberg, a registered financial service representative. The Form U-5 stated that Rosenberg was terminated for violations of “company policies and procedures involving speculative insurance sales and possible accessory to money laundering violations.”

Rosenberg sued Metlife in federal court alleging, among other things, that the statements in the Form U-5 were defamatory. The federal court dismissed the defamation claims prior to trial holding that the claim was barred by an absolute privilege. Rosenberg appealed the dismissal to the United States Court of Appeals for the Second Circuit which certified the question to the New York Court of Appeals.

New York’s highest court reasoned that the public interest implicated by the Form U-5 in conjunction with its “compulsory nature” and “its role in the NASD’s quasi-judicial process” warrant protection of an absolute privilege.

New York employers required to complete these forms should be reassured that their complete candor on a Form U-5 will not be met with a successful defamation lawsuit. However, employers should beware that this decision does not bar employees from seeking to expunge statements in a Form U-5 that they find defamatory.

Rosenberg v. Metlife, Inc.