UBS Wins Promissory Notes Arbitration After Four Delays And A Doctor's Note

March 29, 2019

Our publisher Bill Singer loves to spin a good yarn. Some say Bill is one of Wall Street's great raconteurs. Some say he's just a loud-mouth pain in the ass. Frankly, there are those who say he's all of that, but, you know, to each his own, right? In today's blog, Bill regales us with yet another oddball tale from the annals of FINRA's arbitration forum. This time we are asked to consider a dispute involving seven promissory notes amounting to just shy of $800,000. They don't give such bucks out on the Street to deadbeats, so the recipient was likely among UBS's top producers. And if the Respondent in today's featured arbitration was sharp enough to earn the underlying loans, then he's probably going to do everything he can to fight his former employer's effort to obtain repayment. Sadly, as much as Bill would love to add his own color to this story, the arbitrators did such a great job penning their Decision that there's not much left for him to do. On the other hand, Bill did add some fun music videos from Jackson Browne, Humble Pie, and the Thompson Twins. Now that's quite the amalgamation!

Case In Point

In a FINRA Arbitration Statement of Claim filed in March 2016, Claimants UBS asserted breach of contract attendant to Respondent Walzer's alleged failure to repay seven promissory notes. In addition to interest, fees, and costs, Claimants sought $791,265.94 in compensatory damages representing the following notes and their principal balances due:

Note 1: $331,566.19
Note 2 : $79,092.89
Note 3:    $3,535.52
Note 4:    $6,068.37
Note 5:    $6,520.00
Note 6: $168,787.14
Note 7: $195,695.83

At the end of the hearing, Claimants specified that in addition to the previously requested compensatory damages, they be awarded $43,566.66 in interest; and $57,084.88 in attorneys' fees and costs. In the Matter of the Arbitration Between UBS Financial Services Inc. and UBS Credit Corp., Claimants, v. Howard Walzer, Respondent (FINRA Arbitration Decision 16-00888)

Respondent Walzer generally denied the allegations, asserted various affirmative defenses, and filed a Counterclaim asserting fraud in the inducement; misrepresentation; breach of the standards of commercial honor and equitable principles of trade; and slander and defamation. Walzer sought $1,000,000 in compensatory damages plus costs and attorneys' fees; and a declaration that the Notes were invalid and unenforceable. 

Postponed, Postponed, Postponed, Postponed . . . Postpone?

After Respondent was granted four postponements of the final hearings, he submitted a fifth postponement request on February 22, 2019, which was 13 days prior to the hearing date and 120 days after the parties were notified of the scheduled hearing dates. The fifth request was accompanied by what the FINRA Arbitration Decision characterizes as "a brief doctor's note which stated Respondent was unable to focus and concentrate and unable to remain in a sitting position." The arbitrators denied the fifth postponement but accommodated Respondent Walzer by allowing him to testify from his home via video conferencing with his lawyer expected to attend the hearing in person.

Funny thing about accommodations and expectations

As noted in the FINRA Arbitration Decision:

Respondent's counsel submitted yet another postponement request on March 1st, 2019, one business day prior to the hearing date. This request included previously unsubmitted records of medical treatment and a description of the drug Respondent alleged was causing him difficulties in vision and focus. The Panel declined to consider this late postponement request prior to the hearings. 

At the outset of the hearing, both Respondent and Respondent's counsel attempted participation via video conferencing but, due to technical issues, the Panel requested Respondent's counsel appear in person. Counsel arrived approximately two and a half (2 1/2) hours after the hearing was scheduled to begin. 

At the hearing, Respondent's counsel repeatedly asserted Respondent was unable to participate in the hearing and again requested the Panel consider the Motion made March 1st, 2019, together with the medical records then submitted. 

The Panel reviewed the medical evidence presented and made inquiries of Respondent. The medical treatment summaries provided were incomplete (only one page was presented although that one page indicated "Page 1 of 4") and made no reference to the symptoms Respondent was alleging, but rather stated that as recently as February 2019, less than a month prior to the hearing date, Respondent was alert and conversant. However, Respondent testified he had been experiencing symptoms since November 2018. 

The Panel determined that neither the medical records nor the description of the drug side effects provided by Respondent's counsel supported Respondent's assertions. The Panel took evidence and testimony from both parties on Claimants' initial claim. 

Respondent presented no evidence that the balances due on the Notes were not accurate and payable, but requested offset as a result of the allegations made in the Counterclaim, and relief from liability based on several technical issues. 

At the conclusion of the presentation of evidence and testimony on Claimants' claim, Respondent's counsel refused to proceed with the allegations made in Respondent's Counterclaim and instead proposed the Counterclaim be severed from the initial claim with the provision that this Counterclaim be allowed to be considered at a future date. FINRA regulations require that this Counterclaim be filed as a new claim, subject to all filing and other fees. Claimants agreed and further stipulated that they will not assert any Statute of Limitation defenses on the claims asserted in the Counterclaim.


The FINRA Panel of Arbitrators found Respondent Walzer liable to and ordered him to pay to Respondents UBS  $791,265.94 in compensatory damages. plus $43,566.66 in pre-judgment interest and $37.15 per diem in post-judgment interest, and $57,084.88 in attorneys' fees and costs. The Panel severed Respondent's Counterclaim without prejudice.