UBS is on the hook for $1 million after a FINRA arbitration panel found it wrongfully fired an advisor more than four years ago over allegations of unauthorized trading.
Randy Anderson, who was let go by UBS in November 2020, was awarded $1 million in compensatory damages over allegations of wrongful termination, breach of contract, age discrimination, defamation and other violations. The Financial Industry Regulatory Authority arbitration panel that handed down the penalty also granted Anderson’s request for the removal of a statement on his BrokerCheck page explaining why he was fired.
The page — which lists no other customer complaints or disclosures — says Anderson was “discharged for violating firm policy by failing to obtain verbal authority from client in connection (to) trades made in client’s account and failure to report customer complaint when client complained about the trades.”
WE THINK YOU’LL ALSO LIKE:New FINRA arb criteria shortchange investors, critics sayUBS takes long shot to reduce ‘grossly excessive’ $95M FINRA awardStifel claims arbitrator bias in ‘shocking, runaway’ $133M awardSEC panel weighs limits on RIAs’ ability to require arbitration
The statement will now be changed to list mitigating circumstances for his conduct. They include the facts that the “client previously agreed to the trades in principle,” that the timing of the trades was “intended to prevent the account converting to a brokerage account which would have resulted in commissions,” that UBS had “concluded trades were in client’s best interest” and the “advisor made no profit.”
‘A bit of arrogance’
Anderson’s lawyer, Jarrod Malone of the Shumaker, Loop & Kendrick law firm, said he thinks the arbitration panel overseeing his client’s case began to see UBS in a poor light after the firm seemed to respond only grudgingly to requests for documentation about Anderson’s firing.
“UBS approached this case with a bit of an arrogant attitude, like it could fire whoever it wants,” Malone said. “It didn’t cooperate with the panel’s request for document discovery like it should have.”
The arbitration decision faulted UBS for failing to “present competent evidence of the actual reason for termination.” Although UBS “purported to terminate based upon unauthorized trading, it conducted an investigation for which it claimed it waived privilege but then produced only redacted documents in material respects,” according to the decision.
Dissenting opinion
A UBS spokesperson noted that the arbitration decision was not unanimously handed down by the three-member panel. In a dissenting opinion, one arbitrator details “the spurious nature of the claims against UBS and concludes that the majority ‘displayed a manifest disregard of the law,'” according to the spokesperson.
“UBS disagrees with the majority’s decision in this matter and is considering its options,” the spokesperson said.
The dissent, written by the arbitrator Dean Dietrich, says Anderson was accused of making unauthorized transactions on two separate days involving $500,000 worth of securities in his client’s account. Anderson, according to the dissent, later wrote a “deceptive” email suggesting she should authorize the trades, even though he had already carried them out.
When she caught on to the ruse, Anderson replied by saying “my bad,” according to the dissent. The client said she was displeased with Anderson’s conduct, a complaint he failed to report to UBS.
Six weeks after ratifying the trades, the client moved her account to another firm, according to the dissent.
“If I had been the decision maker, I would probably not have terminated [Anderson],” Dietrich wrote in his dissent. “But that is a decision for management to make under the existing contract ….”
Who ordered the firing?
The majority arbitration opinion also raises questions about who actually decided Anderson should be fired. UBS, according to the panel, said it was made by a single employee.
But when that employee appeared before the arbitrators, he said he never agreed with the firing and went along after being told that senior employees had decided to let Anderson go. UBS, according to the decision, also never furnished documentary support for his employment termination.
“All of this came after a period of repeated motions by Claimant attempting to get [UBS] to comply with its obligations to provide discovery in good faith under applicable FINRA rules,” according to the decision.
The majority opinion also faulted UBS for allegedly running advertisements implying members of Anderson’s team were still with the firm following his firing and for failing to take down a website about Anderson.
At his hearings, Anderson had initially requested the panel award him nearly $2.2 million in past economic damages and a similar amount for future economic damages. He had also sought an unspecified amount for emotional distress, as well as punitive damages.
Besides being ordered in the end to pay $1 million in compensatory damages, UBS was faulted for age discrimination. The panel noted Anderson “was above 60 years and the termination was disproportionately severe.
No investor harm
Malone said the case shows the incredible amount of damage a firm can do to a broker’s career, even in cases in which no real investor harm was alleged. Malone said Anderson had his client’s general approval to make certain transactions in her account but hadn’t yet agreed with her on details related to timing and pricing.
Malone said Anderson was under a deadline to carry out the trades in order to save his client money. He said the client’s assets were scheduled to move from an account where they generated steady recurring fees to one where she would have to pay commissions on each individual trade.
“So he had to make them by this deadline,” Malone said. “He didn’t make any money by doing this.”
Malone said being fired from a firm is often a “devastating event” for brokers. Alongside the public ignominy of having the termination listed on BrokerCheck, brokers often lose “50% of their business, if not more,” he said.
Anderson started his career 29 years ago at Merrill and moved to UBS in 2012. He’s now at Stifel, which he joined in 2020.
“You can spend your entire career like Mr. Anderson with a perfect record,” Malone said. “Then you make one small mistake that’s minor in nature, and UBS destroys your career over it.”
— This article has been updated with details from the dissenting opinion.
