at Pages 2 - 4 of the AppCt Opinion¶ 6 Mr. Munizzi, a registered broker/salesperson and investment adviser representative, was hired by UBS in 2003. In 2016, Mr. Munizzi became the Chicago-area market supervisory officer, and his duties included overseeing the securities brokerage managers-who supervise financial advisors and accounts-in UBS's Chicago branch offices. According to Mr. Munizzi, he received exemplary annual assessments throughout his time at UBS and, in his 36 years working in the securities industry, he never failed a regulatory or internal audit or received a write-up or warning of any kind.¶ 7 On February 5, 2018, two UBS accounts suffered extraordinary losses. One was an employee account and the other was an account held by the mother of an employee. According to Mr. Munizzi's testimony at the arbitration hearing, these two accounts held specific options that can be profitable when "stock market volatility is relatively low" but will likely result in losses when stock prices fluctuate.¶ 8 As also explained by Mr. Munizzi at the arbitration hearing, under regulatory and UBS requirements, customers who hold these risky types of options are subject to "margin" requirements, meaning those customers must maintain a certain level of assets in their accounts "based on the value of the margin position." If the options lose value, a margin call may be issued for additional collateral. If a customer does not respond to that margin call within five days-by, for example, depositing cash or eligible securities-the firm will sell investments in the customer's account to "meet the call." If the loss on the options exceeds the proceeds from the sale of investments in the account, UBS is liable for the resulting "unsecured debit," subject to potential collection from the customer.¶ 9 The stock market was volatile on Friday, February 2, 2018, and at the end of that day, one of these accounts had "large unrealized losses in excess of $700,000" and the other had a "margin call" "that exceeded $800,000." The following Monday, February 5, 2018, the stock market dropped 1000 points, and by market close, the unsecured losses in both of these accounts had increased to more than $3 million. After an investigation into these losses, UBS terminated Mr. Munizzi on April 19, 2018.¶ 10 As required by Illinois law and the FINRA rules, UBS filed a form U5 -- the "Uniform Termination Notice for Securities Industry Registration" -- disclosing the termination. On the form U5, UBS indicated that the "Reason for Termination" was that Mr. Munizzi was "discharged after firm review determined that (1) he failed to adequately supervise employees in association with the risks of an uncovered options strategy in employee and employee related accounts and (2) gave varied responses during the review."¶ 11 Mr. Munizzi filed his complaint before the FINRA arbitration committee, alleging claims of defamation per se, a violation of the Illinois Wage Payment and Collection Act (Wage Act) (820 ILCS 115/1 et seq. (West 2018)), and tortious interference with prospective economic advantage against UBS. In his complaint, Mr. Munizzi alleged that "[w]hen registered employees are terminated, a summary of the U5 appears on FINRA's widely publicized BrokerCheck database," and that "[s]tatements about the termination of Registered Persons which indicate that an employee was incompetent or dishonest can severely impair their ability to obtain employment in the financial services industry." Mr. Munizzi alleged he had been "permanently injured by UBS's false and inaccurate reasons for termination" and that UBS had injured Mr. Munizzi "knowingly and with reckless disregard for [his] wellbeing and future ability to find employment." Mr. Munizzi sought, as relief, expungement and modification of the form U5, compensatory and punitive damages, attorney fees, and interest.
violates a "well-defined and dominant" public policy favoring the disclosure of information regarding negligent or dishonest conduct of securities professionals. UBS also argues that the award should be vacated because the circuit court erroneously concluded that it was bound by the arbitrators' findings. Finally, UBS argues in the alternative that this court should vacate the punitive damages award because it was excessive and contrary to public policy and the law regarding defamation. . . .
even if the public policy exception did apply, the award in this case does not violate any "well-defined and dominant" public policy. UBS argues that the award should be overturned or modified because it violates an explicit Illinois public policy "favoring protection of the investing public through the disclosure of information concerning negligent or dishonest securities professionals." UBS states that the "[f]orm U5's effectiveness *** depends on employers making full and frank disclosures" and that FINRA's bylaws make clear that "[c]andid and accurate disclosure of a regulatory or disciplinary problem *** is critical" See Nat'l Ass'n of Securities Dealers, Notice to Members 97-77 (Nov. 1997), https://www.finra.org/sites/default/files/NoticeDocument/p004412.pdf [https://perma.cc/3 HHS-ST93].¶ 37 The arbitration panel recommended the expungement of the reason for termination and termination explanation on the form U5 "based on the defamatory nature of the information." In doing so, it cited Republic Tobacco Co. v. North Atlantic Trading Co., 381 F.3d 717, 726 (7th Cir. 2004), which states that to succeed on a defamation claim under Illinois law, the plaintiff must show "that the defendant *** made a false statement concerning him" (internal quotation marks omitted) that was then published and caused damage to the plaintiff. Thus, the arbitration award reflects that the arbitration panel found that UBS made false statements about Mr. Munizzi. Therefore, the disclosures on the form U5 were neither "frank" nor "accurate." There is no public policy favoring false or defamatory disclosures by employers.
[I]nstead, UBS provided this court with portions of documents and excerpts of testimony. Thus, this court has no basis for comparing the arbitrators' factual conclusions with the evidence presented, and the circuit court correctly recognized that the arbitrators' factual findings are therefore binding.
¶ 44 Again, this court is bound by the arbitrators' finding that UBS's disclosure was defamatory. Thus, this court cannot accept UBS's premise that it disclosed information that was "fully supported by facts." This is particularly true where, as here, we have not been provided with a full record. We therefore reject the argument that this award would disincentivize securities firms from providing complete and accurate information on similar disclosures. Moreover, for all the reasons outlined above, we are not convinced UBS's public policy argument plays any role in this case.
There is no public policy favoring false or defamatory disclosures by employers.