UBS must pay $1 million to a fired advisor who accused the financial services company of defamation, wrongful termination, breach of contract and age discrimination, among other violations, an industry arbitration panel ruled Tuesday.
One arbitrator on the three-person panel dissented, and a UBS spokesperson told ThinkAdvisor by email Thursday that it’s considering its options.
UBS terminated Randy Anderson of Boise, Idaho, in 2020, telling the Financial Industry Regulatory Authority that he was discharged for violating firm policy by failing to obtain a client’s verbal authority in connection with trades and failing to report when the client complained about them, his FINRA BrokerCheck page shows.
Anderson, now affiliated with Stifel Nicolaus, responded that he had discussed the trades, which were in a fee-based account, with the client and, in order to help the client avoid additional fees, made the trades after trying unsuccessfully to reach the client for a final sign-off before a deadline. Anderson also told FINRA that UBS’ outside counsel later told the client in a letter that the trades had been made in the client’s best interest.
“A majority of the Panel concluded that (Anderson) raised serious questions about the termination process including a prolonged time to terminate, the severity of the offense, potential disparate treatment of (the advisor) as compared to others at (UBS) … and potential financial motivations for termination,” the FINRA award states.
UBS “failed to present competent evidence of the actual reason for termination,” the majority found. While the firm purported to terminate based on unauthorized trading, “it 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.
UBS produced no documents explaining the firing decision and questions were raised about documents missing from Anderson’s files left at the firm, the panel said. This followed repeated motions by Anderson attempting to get UBS to comply with its obligations to provide discovery in good faith under applicable FINRA rules, the authority said.
“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.
The panel majority also concluded that UBS’ description of Anderson’s termination on his Form U5 was unfair to the advisor.
The panel:
- Awarded Anderson $1 million in compensatory damages from UBS
- Granted his age discrimination claim, given that he was over 60 when dismissed
- Recommended expungement of the reasons given for termination on the Form U5 and mitigating changes in the termination explanation
Dissenting Opinion
The dissenting member said he probably wouldn’t 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.”
Among his objections, the dissenting 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.
When the client expressed her displeasure with the trades, Anderson failed to report this to his supervisor, claiming it didn’t constitute a reportable complaint, according to the dissent. “The client did subsequently ratify the trades, but six weeks later she abruptly transferred her account to another firm, even though she had been (Anderson’s) client for twenty years and had followed him from another firm. She also refused to respond to his emails and calls.”
The company spokesperson 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.’”
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.