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How Outside Business Activities Doomed a UBS Advisor

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As regulators seek to weed out bad brokers from the business, it appears that UBS has fired an advisor for violating company policies.

Phil Fiore, a Stamford, Connecticut-based advisor who has been in the business for 22 years and was on “heightened supervision” in 2015, failed to disclose his work as an unpaid director for an electric utility for which he was a consultant and did not ask UBS for approval when he ran a charity golf event and wrote blogs. 

The registered rep also did not disclose to UBS that one of his clients was an investor in the utility. 

While more details on the golf event and related activities are not included in Fiore’s regulatory records, his disciplinary history does contain a long list of customer complaints – the majority of which were denied.

Consistent Criticisms

The first client complaint against Fiore came in 1995, when he was with Prudential Securities.

The investor alleged excessive, unauthorized and unsuitable trading and requested $50,000 in damages; the matter was settled for $30,000, according to the Financial Industry Regulatory Authority’s BrokerCheck. Fiore denied the allegations and did not contribute to the settlement.

In 2002 when the rep still worked for Prudential, clients alleged that he did not discuss investing on margin and that he sold their diversified portfolios to invest in high-tech securities; the investors were seeking close to $72,000, but a regulatory panel denied the requested damage award.

Two damage awards in 2003 for alleged improper asset allocation and a failure to exercise loss management in an account were also denied, as was another damage request that same year for $500,000 which the client said was due to alleged “unsuitable aggressive option leaps and equity activity.”

Recent Developments

Fiore’s standing with UBS, the firm he moved to in 2009 after spending several years with Merrill Lynch, became strained in May 2015. The broker-dealer suspended him for 30 days.

The advisor agreed to the sanctions, including a $5,000 fine, and the information in his FINRA records that he “engaged in an outside business activity [in 2008] without providing written notice” to Merrill Lynch.

Specifically, Fiore served as a business consultant to an electric utility and arranged for a client of the utility to loan it $800,000. For this role, he received stock in the utility, according to BrokerCheck.

While such outside business activities are not prohibited under FINRA rules, they “must be disclosed” to employers, Fiore’s record states. “At the time, I thought the shares were worthless, and I inadvertently forgot to disclose these shares,” he explained, adding that “investors in the electric company benefited from the bridge loan I helped to arrange.”

UBS’ recent firing of the advisor appears to be related to Fiore’s continuing involvement with the utility and related activities.

“The firm concluded that while on heightened supervision, [the] financial advisor violated firm policies by not disclosing an uncompensated external directorship for a not-for-profit entity affiliated with a client for which he was an institutional consultant; not seeking approval to operate a charity golf tournament; not seeking approval to make blog posts; and not disclosing that a new client had an investment in the financial advisor’s approved outside business,” according to FINRA records.

UBS declined to comment on the matter.

State’s Focus

Fiore had been put on heightened supervision in 2015 by Massachusetts regulators when UBS moved to register him in that state.

Earlier this year, Massachusetts securities regulators conducted a sweep of more than 240 broker-dealers with a “higher than average” number of advisors that have disciplinary incidents on their records.

According to Commonwealth Secretary William Galvin, the state’s top securities regulator, few registered representatives with such records have been placed on heightened supervision by the BDs.

When the state issued a report on such brokers a few weeks ago, Galvin said: “This report should act as a warning to the broker-dealer community that if the industry is not willing to self-police in this area, then regulators will step in and demand changes by regulatory action.”

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