UBS Wealth Management USA has lost its bid in federal court to have an arbitration award against the firm dismissed, according to AdvisorHub.
In March 2025, arbitrators awarded a group of nine investors $92.2 million in damages after they alleged that UBS engaged in a high-risk trading strategy linked to a financial advisor’s unsuitable recommendations shorting shares of Tesla Inc.
The arbitration panel found UBS liable for $69.1 million, or 75% the total, in punitive damage to the claimants and about $23 million in compensatory damages.
U.S. Chief District Judge Stephanie M. Rose of Iowa denied UBS’ motion to vacate, as well as granting the clients’ petition to confirm the arbitration award. “UBS has failed to carry its “heavy burden” of demonstrating that the panel exceeded its authority by imposing a grossly excessive punitive damage award in violation of public policy,” Rose wrote.
The judge also rejected veteran financial advisor Andrew Burish’s attempt to vacate the $3 million awarded against him in the same arbitration case.
Rose’s order granted the investors post-judgment interest at a rate of 6.13% beginning on February 28, 2025 but decided, as did the FINRA arbitration panel, that they are not entitled to recover attorney’s fees and costs.
A UBS spokesperson declined to comment on whether it will seek further appeal. “UBS is disappointed by the court’s decision, which we respectfully disagree with,” the spokesperson said.
UBS contended that the punitive damages imposed by the arbitrators were “grossly excessive.” The investors justified the damages as “warranted” by an “an accumulation” of UBS’s “egregious behavior,” including “improper sales techniques,” deletion of evidence and “deliberate breaches of investor-protection standards.”
The UBS clients alleged that from September 2019 to July 2020 Burish “recommended an unsuitable and risky strategy of selling the stock of Tesla short and recommended that they continue to hold the positions in the face of mounting losses.”.
In her order, Rose called Burish “a self-identified ‘risk taker’ who built a successful practice managing $3.8 billion in client assets.”.
“If the court accepted UBS’s argument, it would open the courthouse doors to every losing party following an arbitration award of punitive damages,” Rose wrote. “Moreover, it would effectively permit litigants to end-run the prohibition on judicial reconsideration of the merits of an arbitration award.”
She also rejected UBS’s argument that the arbitrators erred because they issued the award without finding a specific “willful and wanton disregard” for the client’s rights.
“Arbitration does not provide the same procedural formality as the judicial process; that is a feature, not a bug.” Rose wrote, noting that neither UBS nor the claimants had requested an explained decision that would have spelled out the panelists’ rationale.
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 PC, our attorneys’ unparalleled litigation experience comes from leveraging their industry-specific knowledge developed from working at firms such as Morgan Stanley, UBS Financial Services, serving as outside counsel for some of the world’s largest law firms, and through prior affiliations with the SEC. For more information about our securities arbitration and litigation services, please contact Hyman Cotter PC at 833-665-0784 or through our online contact form.
