Thursday, November 7, 2013

Andrews v. Prudential Securities, Inc. case brief

Andrews v. Prudential Securities, Inc. case brief summary
160 F.3d 304 (1998)

Plaintiff brokers challenged a judgment of the United States District Court for the Eastern District of Michigan at Detroit, which granted summary judgment on behalf of defendant brokerage firm. The brokers alleged that the brokerage firm filed false Uniform Termination Notice of Securities Industry Registration forms (U-5 forms) with the National Association of Securities Dealers (NASD).

The brokerage firm filed amended U-5 forms with the NASD in response to customer complaints in connection with limited partnerships that were sold by the brokers. At the time of the filing, the brokers were no longer working for the firm, but NASD by-laws required the firm to file the amended U-5 forms.

The brokers filed a complaint alleging defamation, intentional infliction of emotional distress, and gross negligence.

  • The court found that the truth contained in the U-5 forms was a complete defense to defamation: the brokers were the brokers of record at the time of the limited partnership purchases, the amount of actual losses reported was accurate, the dollar amounts of the settlements had a factual basis, and the claims, as reported, resulted from the mailings of claim forms to investors who purchased limited partnerships. 
  • The broker's claims for intentional infliction of emotional distress also failed, because the truthful publication of and accurate representations of the clients' complaints could not constitute outrageous conduct. 
  • The court affirmed and concluded that the firm did not breach any duty, if any were owed, to the brokers by filing the forms.


The court affirmed the judgment of the district court.

Suggested Study Aids For Securities Regulation Law
Securities Regulation in a Nutshell, 10th (Nutshell Series)
Securities Regulation: Examples & Explanations, 5th Edition
Securities Regulations: The Essentials

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