Employers Who Lie About Former Employees May Be Held Accountable

Rare win for a rep in defamation suit against Edward Jones

Former adviser with firm claims broker-dealer defamed him on U-5 termination report; brokerage ordered to pay $100K
By Dan Jamieson, Investment News, March 1, 2011
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Brokerage firm Edward Jones on Monday was ordered by an arbitration panel to pay a former representative $100,000 in damages.

Marc Miller, who left Jones in October 2008 for Morgan Keegan & Co. Inc. in Sarasota, Fla., claimed that Jones defamed him on his U-5 termination report and breached an agreement to clear his record.

George Guerra, Mr. Miller's attorney at Wiand Guerra King PL, said Mr. Miller resigned from Jones, but the firm claimed that he had been terminated for a "laundry list" of alleged problems, including unauthorized use of margin and misuse of his expense account.

As a result of the tarnished U-5, Mr. Miller had to withdraw pending registrations from several states, Mr. Guerra said.

In addition, as it normally does with negative U-5 filings, the Financial Industry Regulatory Authority Inc. opened an investigation into Mr. Miller's conduct.

“When we [saw the U-5], we were stunned,” Mr. Guerra said. “Jones knew this is what would happen to the guy.”

Mr. Guerra said Jones ultimately agreed to amend the U-5 and inform Finra that the firm's own investigation found no problem with Mr. Miller.

But Jones backtracked on that agreement, he said. The firm would not tell Finra that it had completed an investigation of Mr. Miller, Mr. Guerra said.

"Edward Jones agreed to the expungement of Marc Miller's U-5, which was cleared more than a year ago," said Jones spokesman John Boul in a statement. "We're pleased the matter has been resolved."

Although Mr. Miller's award counts as a rare win in a defamation case, it still comes up short, Mr. Guerra said.

Mr. Miller had asked for $750,000 in damages, $120,000 in attorney's fees and $3 million in punitive damages.

The $100,000 award isn't enough to keep a firm from retaliating against a defecting broker, Mr. Guerra said.

Mr. Miller also had to wait for more than two years to get justice, Mr. Guerra added.

The broker had to file a new arbitration claim in 2009 after the first settlement agreement fell through, he said.

Edward Jones Loses $100,000 Advisor Defamation Case

Advisors for advisors, Wednesday, March 02, 2011 07:01
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Arbitrators have finally given a Florida rep who defected from Edward Jones in 2008 his clean U-5 back and $100,000 in damages after determining that his old boss claimed he'd been fired for cause.

The negative report on Marc Miller's U-5 interfered with his registration once he went to Morgan Keenan and prompted a FINRA investigation into his conduct.

However, none of the charges -- including misuse of firm funds -- were true.

Edward Jones reportedly sat on the order to correct Miller's U-5 for a year before correcting it.

Miller wanted about $4 million in damages and punitive charges. He got $100,000, which his lawyer says is not nearly enough to discourage other firms from similar behavior in the future.

Comment from Betsy Combier:

This case brings to my mind the fact that Theresa Europe, Director of the Administrative Trials Unit or "Gotcha Squad" randomly places tenured teachers on the "Ineligible/Inquiry List or "no-hire" list. When asked by New York State Supreme Court Judge Alice Schlesinger (in the matter Philomena Brennan v NYC BOE, Index number 112977-2009) to give the how and why the list is created and names are placed there, Ms. Europe removed Ms. Brennan's name, thus thwarting the efforts of people like me to figure out the reasoning behind this very damaging career-ending list of names.