Coastal States Erode Brokers' U-5 Rights - Support our Petition to the NASD Asking for a Uniformed "Qualified" Standard

As discussed in my last blog post, the New York Court of Appeals last week held that securities industry employees working in the state have no legal recourse if they have been illegally defamed on their Form U-5 by a former employer.

Think about that -- no legal recourse even though they were unfairly defamed. None. Zero. Zip.

As questionable as that outcome was, New York is not the first state to take that questionable stance. California also gives securities industry firms a free rein when it comes to an "absolute" privilege to such statements. These are the only two states to do so, probably because the other 48 know they have it absolute-ly wrong.

Elsewhere in the country, firms only have a "qualified" privilege. States like Illinois, Tennessee, Georgia, Michigan, Florida, and Oklahoma accept that employees have a right to due process and recognize that they should be able to seek legal recourse should former employers file false and defamatory statements that can ultimately serve to sound the death knell to their careers in the securities industry.

State-by-state standards make no sense. It's time for one uniform standard, for one central "playbook" that preserves brokers' rights by giving them legal recourse should they be the unfortunate victim of what essentially amounts to a corporate smear campaign.

As I recently wrote to Mary Schapiro, Chairman and CEO of the NASD, the time is now for the NASD to revisit a rule first proposed in 1998 to adopt the "qualified" privilege standard.

I hope you will join this cause and sign my online petition here.