UBS Financial Services suffered a setback its arbitration case against a real estate executive involving the firm’s handling of shares and options of real estate brokerage Compass Inc., according to Financial Advisor.
A Financial Industry Regulatory Authority arbitration panel ordered UBS to pay the claimant, Kyle Blackmon, $5.375 million in compensatory damages, plus interest, and $125,000 in costs. Blackmon, a real estate broker who heads luxury sales Compass, had been seeking $19.7 million in damages.
The arbitration award said Blackmon’s claim related to UBS’ recommendations and management of his portfolio, including, but not limited to, his “unexercised stock options and shares in Compass Inc., before, during and after the Compass initial public offering” in 2021. Blackmon alleged that UBS failed to act in his best interest when advising him on Compass-related holdings surrounding the IPO.
In his statement of claim against UBS, Blackmon alleged a breach of fiduciary duties; intentional and negligent misrepresentations; negligence; and violation of Regulation Best Interest, as well as other charges.
UBS’s recommendations regarding Blackmon’s unexercised options and equity positions occurred during a volatile period for the stock, Financial Advisor reported. After Compass priced its IPO at $18 a share in April 2021, the stock plummeted in ensuing months and later fell to about $2 in 2023 before recovering above $10.
The UBS strategies involved advanced hedging techniques tied to IPO timing, according to people familiar with the case. Records show the recommendations were complex and closely linked to market swings following the offering. The advisor who serviced the account was not named as a respondent and was not a party to the arbitration.
The two-person arbitration panel, operating under FINRA Dispute Resolution Services Inc., gave no reasoning for the award, which is typical for these matters.
UBS declined to comment on the decision. Blackmon’s attorney did not return a phone call.
Handling financial services disputes requires counsel with a significant understanding of the industry, the laws, rules and regulations that impact our clients and the forums in which disputes are adjudicated. At Hyman Cotter, our attorneys have handled hundreds of arbitrations before FINRA, the Chicago Board Options Exchange, the Chicago Board of Trade, JAMS, the American Arbitration Association and other self-regulatory organizations nationwide. For more information about our arbitration and litigation services, please contact us at (844) 716-2165 or through our online contact form.
