Former UBS Employee Sues Over U5 Failure to Disclose 2003 Termination

December 28, 2011

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in December 2010, Claimant asserted, among other claims, that Respondents UBS had engaged in wrongful discharge, fraud, and defamation of his Form U5.

Claimant requested an award of

  • back pay from March 11, 2010 along with benefits and bonuses;
  • severance in an amount of approximately $57,500.00;
  • an award of approximately $91,000.00 of UBS Equity Ownership Plan;
  • guaranteed relocation expenses of approximately $95,000;
  • interest, costs and attorneys' fees of approximately $100,000.00;
  • punitive damages, and
  • expungement of the Form U-5 filed by Respondent UBS Financial Services to correctly disclose that the reason for Claimant's termination was his transfer to Respondent UBS Bank in 2003.

In the Matter of FINRA Arbitration 10-05600, December 21, 2011.

Respondents generally denied the allegations and asserted various affirmative defenses. Because Respondent UBSBank is not a member or associated person of FINRA and did not voluntarily submit to arbitration, the FINRA Arbitration Panel made no determination with respect to Claimant's claims against UBS Bank.


On or about September 7, 2011, the parties notified FINRA that they had settled this matter and submitted a proposed Stipulated Award recommending expungement and modification of Claimant's Form U5 and the registration records maintained by the Central Registration Depository ("CRD").


The FINRA Arbitration Panel recommended the expungement of Claimant's Form U5 dated April 9, 2010, so that the termination comment/explanation from Section 3 is deleted and replaced with the following language:

"[r]egistration is deemed to have terminated at an earlier date as the result of his voluntary termination of employment from UBSFS and acceptance of a position with UBS Bank USA." The Reason for Termination, "Discharged," shall be changed to "Other."

The Panel also recommends that Question 7F(1) on [name redacted by BrokeAndBroker]Form U5 dated April 9, 2010 be amended by changing the response to the foregoing question from "Yes" to "No" and to delete the accompanying Termination DRPs (disclosure reporting pages) in its entirety.

Panel finds that although Respondent believed - and had good cause to believe - that it was appropriate to continue Claimant's securities industry registrations during  his employment with UBS Bank USA, an affiliate of Respondent's, the Panel concludes that Claimant's registrations should have been terminated in 2003, when he voluntarily terminated his employment with Respondent to accept the position of Chief Investment Officer of UBS Bank USA.

Bill Singer's Comment

An interesting case on a few levels.

First, note the range of damages sought by Claimant.  I often am asked by potential clients what kind of damages that they can seek in these employment disputes.  Claimant's claims seem to have covered many of the usual bases.

Second, if and when you leave a FINRA member firm, get a copy of your Form U5 -- you're entitled to that within 30 days of termination.  Also, in Wall Street parlance a "termination" means that your registration with your former FINRA member firm was terminated -- it does not necessarily mean that you were fired. Terminations, as used on Form U5, can consist of a voluntary resignation, a permitted-to-resign, or a discharge. Regardless of what's initially indicated, make sure to obtain your U5 to confirm that your understanding of the termination is accurately reflected; if it isn't, either seek an amendment or, as was the case in this arbitration, file a Statement of Claim.

Third, among the more common disputes between former employees and employers is whether the former voluntarily quit, was permitted to quit, or was fired.  Attendant to that dispute are disagreements over whether the registered person purportedly "voluntarily quit" on January 3 at 11:52 am or whether the registered person was previously fired on January 2 at 3 pm.  Similarly, there are many post-termination disputes over whether a registered person "voluntarily" resigned or was first informed that the choice was to quit or be fired (a permitted to resign).

Finally, the issues presented here are not unique to UBS.  With the ongoing strains caused by the Great Recession and the increasing numbers of industry lay-offs, many employees of firms such as Merrill Lynch, Morgan Stanley, JP Morgan,Wells Fargo, and other large financial institutions are grappling with similar concerns.

While many individuals experience some mental paralysis when informed of their termination, it is important to overcome that initial reaction and immediately ensure that the circumstances of your separation from the firm were correctly characterized on your U5. What you desperately want to avoid is the kind of situation that confronted Claimant: a 2003 termination impacted a 2010 U5 requiring a 2011 FINRA Arbitration Decision.