Ah yes, old UBS -- that's you and us, or however their television commercial goes. Whatever. Notwithstanding the touchy-feely advertising, UBS isn't sitting around the campfire singing Kumbayah when it comes to its former stockbrokers and collecting money owed on outstanding promissory notes.
In a Statement of Claim filed with FINRA on June 4, 2009, UBS sought $809,922.00 in compensatory damages; interest; costs; attorneys' fee; and other just relief as a result of former employee Richard Lee's alleged breach of a promissory note. Lee generally denied the allegations, asserted various affirmative defenses, and Counterclaimed for $4,000,000.00 in compensatory damages arising from misrepresentation; fraudulent inducement; and unjust enrichment. In the Matter of the Arbitration Between UBS Financial Services, Inc., Claimant, versus Richard Lee, Respondent. (FINRA Arbitration 09-03321, May 11, 2010).
When millions of dollars are at issue, things will get testy. And boy, UBS and Lee sure seem to have turned on the pyrotechnics with this arbitration.
Respondent Lee filed Motions to Compel, for Sanctions, and to Dismiss because of Claimant UBS's alleged failure to complete discovery by the deadline set by the Arbitration Panel. UBS asserted that it had fully complied with the deadline and complained that Lee had failed to make any effort to resolve discovery disputes. Further, UBS said that any failed production by it was unintentional and, therefore, not sanctionable. On February 10, 2010, the Panel decided to defer any ruling on the Motion to Dismiss until the hearing but denied the Motion for Sanctions.
The Panel found that Respondent was liable under the Note and ordered Lee to pay Claimant UBS $809,922.83.00 in compensatory damages plus interest. However, the Panel also found that Claimant UBS was liable on Lee's Counterclaim for unjust enrichment, and ordered UBS to pay Lee $300,000.00 in compensatory damages plus interst. Obviously, the Motion to Dismiss was denied. What happened to Respondent Lee's Motion to Compel? Inexplicably, the FINRA Arbitration Decision does not specifically address the Panel's ruling on the Motion to Compel.
Regulatory lawyer Bill Singer has analyzed and posted the latest crop of FINRA disciplinary cases.
Broker Ramsey served as a registered representative for an elderly customer who executed a power of attorney, giving Ramsey broad authority over her financial affairs. Ramsey used the power of attorney to obtain approximately $482,000 in withdrawals from an annuity, which, after taxes were deducted, totaled approximately $373,750. Checks for $373,750 were issued in the customer's name and sent to Ramsey's office. Ramsey converted some of the funds for his personal use and borrowed $275,000 from the customer. In total, he owes the elderly customer approximately $500,000. See what sanctions were imposed upon him
Broker Chrusciel's firm verbally warned Chrusciel that he was not permitted to use inventory accounts for personal trading and distributed a written memorandum to all employees telling them that this practice was prohibited, but Chrusciel ignored the warning and, to avoid detection, stopped using his own accounts and began allocating trades to accounts his relatives held. For some reason, one warning wasn't enough. Chrusciel's firm warned him in writing to stop using firm inventory accounts for personal trading or he would be terminated. See what sanctions were imposed upon him
While contemplating his resignation from his member firm to work at another member firm, Broker Current altered customer telephone records at his member firm without authorization in order to slow down other registered representatives who he believed would be assigned to call his customers after he resigned. You think this is an oddball violation? Think again. See what sanctions were imposed upon him
Broker Goode failed to execute a customer's instructions to liquidate positions in the customer's account, and the value of securities in the account declined precipitously with the customer incurring losses exceeding more than $1 million dollars. See what sanctions were imposed upon him
ONE OF THE ALL-TIME MOST BIZARRE FINRA CASES: Associated Person Pierce conspired with others to steal $16,000 from a casino by engaging in a scheme with a blackjack dealer to cheat. See what sanctions were imposed upon him