Representing financial professionals, financial institutions and investors in investment loss, employment and disclosure matters, and in regulatory investigations nationwide.

Ex-broker ordered to pay back UBS $2.3 million but U5 language will be revised

On Behalf of | Jun 9, 2022 | Firm Transition

A former broker for UBS was ordered to pay the firm back over $2.3 million but also had the language on his U5 termination form revised, AdvisorHub reports.

A Financial Industry Regulatory Authority arbitration panel issued the ruling last month in the case of Bruce Davis Smith of Atlanta, who was discharged from UBS in 2018.

The following year, the firm took action against Smith for promissory notes that were due when he was terminated. UBS claimed breach of contract and unjust enrichment, seeking about $1.9 million in compensatory damages plus interest, costs of arbitration, including lawyers’ fees, and any other relief deemed appropriate by the arbitrators.

Smith filed counterclaims against UBS over what he called legal malpractice, breach of fiduciary duty and defamation.

In the award issued by FINRA’s three arbitrators, Smith was ordered to pay the firm over $2.1 million in loans and interest and $208,000 in attorney fees. At the same time, the panel recommended expungement of the explanation UBS had filed in Smith’s U5 termination notice so that mention of clients was removed and the language referring to the discharge was less specific.

The arbitrators said, “The Reason for Termination shall remain the same. The Termination Explanation shall be replaced with the following language: ‘FA discharged after making incomplete disclosure of information to firm attorneys regarding actions related to regulatory inquiry in which FA was questioned as a witness.’” The original language in the notice read, “FA discharged after admitting making incomplete disclosures of material information to firm attorneys regarding circumstances related to client trip, in connection with SEC inquiry in which FA was questioned as a witness.”

Smith’s counterclaims and request for damages was denied. The lawyer for Smith expressed disagreement with the panel’s decision on damages but said Smith had been exonerated with regards to the U5 language, which the lawyer called improper and misleading.

It is important to address any inaccurate information contained on a Form U5 as soon as possible through experienced counsel who will try to work with your prior firm to change the Form U5. The attorneys at Lewitas Hyman blend industry and regulatory experience when representing financial professionals in Form U5 disputes and other related concerns. If you are concerned that you may be, or if you already have been, terminated from your firm, or if you believe you have inaccurate information on your Form U5, we invite you to contact us at (888) 655 6002 or through our online contact form to schedule a free consultation.