A panel of arbitrators ordered UBS Wealth Management USA to pay $1 million to a former advisor who alleged he was wrongfully terminated by the firm, ThinkAdvisor reported.
The Financial Industry Regulatory Authority panel issued its ruling in the matter of Randy Anderson of Boise, Idaho, who was discharged by UBS in 2020. The company said it took the action after Anderson violated firm policy by failing to obtain a client’s verbal authority regarding trades and failing to report when the client complained about them.
Anderson contended that he had in fact discussed the trades with the client and made them after trying unsuccessfully to reach the client for final approval. He said he had taken the action to help the client avoid additional fees, adding that UBS’ outside counsel had told the client the trades were in their best interest.
Anderson asserted the following causes of action: wrongful termination; breach of duty of good faith and fair dealing; breach of fiduciary duty; breach of contract; unfair competition/unjust enrichment; discrimination based on age in violation of the age discrimination in Employment Act, 29 U.S.C. §§ 621-634; equity; and defamation. He also alleged that the Form U5 filed by UBS was defamatory.
Two of the three FINRA arbitrators ruled in his favor with the $1 million award. Anderson, who is now with Stifel, Nicolaus & Co., had sought nearly $4.4 million in damages. The majority also ordered that the termination notice that appears on his BrokerCheck record be replaced with a more favorable description of the circumstances surrounding his departure.
“Claimant raised serious questions about the termination process including a prolonged time to terminate, the severity of the offense, potential disparate treatment of Claimant as compared to others at Respondent’s firm, and potential financial motivations for termination,” the majority wrote.
The two arbitrators added that UBS “failed to present competent evidence of the actual reason for termination.” Though the termination was based on unauthorized trading, the firm “conducted an investigation for which it claimed it waived privilege but then produced only redacted documents in material respects,” the panel said.
“Most troublingly, (UBS) informed the Panel and (Anderson) that a specific individual made the termination decision and that such individual would be testifying at the hearing. At the hearing, it became clear that the individual had long disagreed with the termination decision and only ‘agreed’ with it and executed after being informed of the decision actually made by more senior members of management, none of which were present at the hearing,” according to the arbitrators, who added that UBS did not produce any documents explaining the decision to terminate Anderson.
The panel said Anderson tried repeatedly to get UBS to provide discovery in good faith under FINRA rules as required. “In light of the lack of competent testimony to the termination decision and lack of transparency in the document exchange of documents and evidence, along with the serious questions raised above about the termination process, a majority of the Panel concluded that the termination was wrongful,” the award states.
One arbitrator on the three-person panel dissented, saying he probably would not have terminated Anderson himself, but “that is a decision for management to make under the existing contract, not by the panel under a contract devised by it. The panel does not have carte blanche to create a contract to which the parties have not agreed, and in doing so has displayed a manifest disregard of the law.”
That arbitrator said UBS had a right to terminate Anderson, who was an “at will” employee. The advisor made nearly $500,000 in unauthorized trades, after which “he wrote her a deceptive email ‘suggesting’ she should make these trades when in fact he had already made them,” the panelist wrote.
A spokesperson for UBS said “UBS disagrees with the majority’s decision in this matter and is considering its options. We note the dissenting arbitrator’s analysis, which details the spurious nature of the claims against UBS and concludes that the majority ‘displayed a manifest disregard of the law.’”
Lewitas Hyman routinely represents financial advisors and other registered representatives who were wrongfully terminated by their firm. Our attorneys take a thoughtful approach to clients’ cases by first trying to work with the terminating firm concerning the Form U5 disclosure. When necessary, our attorneys are prepared to file wrongful termination and defamation claims. We are prepared to assist when the circumstances surrounding your termination are wrongful. Contact Lewitas Hyman at (888) 655-6002 or through our online contact form for a free consultation.
