New York Court of Appeals Answers Certified Questions Regarding National Association of Securities Dealers

The New York Court of Appeals recently answered the following question certified from the United States Court of Appeals for the Second Circuit in Rosenberg v. Metlife Inc., Metropolitan Life Ins. Co.:

Are statements made by an employer on an NASD employee termination notice ("Form U-5") subject to an absolute or qualified privilege in a suit for defamation?

The National Association of Securities Dealers (“NASD”) requires that, whenever a registered employee is terminated, a member firm must fill out and submit to the association a termination form (“Form U-5”), which the NASD retains and makes available to any member firm upon request. The form asks the reason for the termination; it is typically requested by member firms whenever a broker applies for a new job.

The Court answered the certified question by concluding that the statements enjoy an absolute privilege.  It analyzing the NASD's role as a self-regulatory entity in arriving at its conclusions that an absolute privilege applies here.

Here is an article on the holding from Reuters.com.