A former UBS financial advisor (a top producer) was fired for allegedly violating compliance policies. The advisor tells a markedly different story. He says that he was terminated in retaliation for blowing the whistle on what appeared to be the financial exploitation of an elderly widow. All of which brings us to a 2018 federal district court opinion. Which brings us to a 2021 FINRA Arbitration Award. Which brings us to a 2022 federal district court opinion. Which brings us to a 2023 federal circuit court opinion. Which brings us to someplace, somewhere -- but I'm not exactly sure where we have arrived other than at the point of confusion.
Mr. Price was terminated after allegations were raised that he failed to disclose to the Firm his receipt of information which appeared to be material and non-public relating to a low-priced security in which he and his clients engaged in transactions; violated Firm policy by communicating with third party analysts and circulating research regarding the same low-priced security in which he and his clients invested; and violated several other Firm compliance policies.
Mr. Price denies all allegations against him, and furthermore, he has filed a whistleblower retaliation lawsuit against his ex-employer for wrongful termination under the Florida Whistleblower Act. In addition, Mr. Price has filed a claim against his ex-partners at his prior employer for defamation under FINRA arbitration. As of September 30, 2021, both cases are ongoing.
In response to UBS' termination, Price filed a lawsuit in the United States District Court for the District of New Jersey ("DNJ"). As stated in the Syllabus in Craig D. Price, Plaintiff, v. UBS Financial Services, Inc., Defendant (Opinion, United States District Court for the District of New Jersey ("DNJ"), 17-CV-01882 / April 19, 2018) (the "2018 DNJ Opinion")
Plaintiff Craig D. Price brings this action against UBS Financial Services, Inc. (“Defendant”), alleging claims of whistleblowing retaliation under the Wall Street Reform and Consumer Protection Act (“Dodd–Frank”), 15 U.S.C. § 78u–6, and the Florida Whistleblower Act (the “FWA”), Fla. Stat. § 448.102. This matter comes before the Court on Defendant’s motion to lift the Court-imposed stay of proceedings and dismiss Plaintiff’s Dodd–Frank claim with prejudice. There was no oral argument. Fed. R. Civ. P. 78(b). For the reasons set forth below, Defendant’s motion is GRANTED.
On February 21, 2018, the Supreme Court issued its opinion in Digital Realty, holding that the anti-retaliation provision of Dodd–Frank does not extend to an individual who has not reported a violation of the securities laws to the Securities and Exchange Commission (“SEC”) and therefore falls outside of the Dodd–Frank definition of “whistleblower.” See Digital Realty Trust, Inc. v. Somers, 138 S. Ct. 767, 772 (2018).
The Supreme Court was unequivocal in holding the following:
The question presented: Does the anti-retaliation provision of Dodd– Frank extend to an individual who has not reported a violation of the securities laws to the SEC and therefore falls outside the Act’s definition of “whistleblower”? We answer that question “No”: To sue under Dodd– Frank’s anti-retaliation provision, a person must first “provid[e] . . . information relating to a violation of the securities laws to the Commission.
Digital Realty, 138 S. Ct. at 772–73 (citations omitted). It further noted that the “core objective of Dodd–Frank’s robust whistleblower program . . . is to motivate people who know of securities law violations to tell the SEC.” See id. at 777 (internal quotations and citations omitted). “In sum, Dodd–Frank’s text and purpose leave no doubt that the term 'whistleblower’ in § 78u–6(h) carries the meaning set forth in the section’s definitional provision.” Id. at 778. Consequently, “[t]he disposition of this case is therefore evident: [plaintiff] did not provide information 'to the Commission’ before his termination, § 78u– 6(a)(6), so he did not qualify as a 'whistleblower’ at the time of the alleged retaliation. He is therefore ineligible to seek relief under § 78u–6(h).” See id.The same outcome must follow here. Plaintiff does not allege that he reported any information to the SEC prior to his termination. His testimony to FINRA plainly does not meet the statutory requirement and he, therefore, is not a whistleblower under Dodd–Frank. Furthermore, any attempt to amend his complaint with facts stating that he disclosed information to the SEC after his termination would be futile. As the Supreme Court made clear, the purpose of Dodd–Frank whistleblower protections is to incentivize individuals like Plaintiff to come forward and provide information of securities law violations to the SEC. See id. at 777–78. Here, Plaintiff did not come forward until well after the fact of the alleged securities violations, his testimony to FINRA and his own termination. Plaintiff had ample time between when he first learned of the violations and his termination to report the misconduct to the SEC, but he chose not to. The Court, therefore, finds that Plaintiff does not meet the definition of “whistleblower” under Dodd–Frank. Accordingly, Plaintiff’s Dodd–Frank claim is DISMISSED WITH PREJUDICE.
At Page 3 of the 2018 DNJ Opinion
Was the Award rendered for defamation?For violation of Florida's Unfair and Deceptive Trade Practices Act?For Tortious Interference with Contract?Was there any wrongful termination of Claimant for alleged whistleblowing?
SIDE BAR -- Who's on First?: In March 2017, Price sued UBS in DNJ for whistleblower retaliation under the Dodd-Frank Wall Street Reform and Consumer Protection Act and for retaliation in violation of the Florida Whistleblower Act ("FWA"). DNJ denied UBS' motion to dismiss the FWA claim. DNJ stayed UBS's to dismiss the Dodd-Frank claim pending the Supreme Court's Opinion in Digital Realty Trust, Inc., and upon issuance, the Court granted UBS Motion to Dismiss. In 2022, DNJ addressed UBS' Motion for Summary Judgment on the FWA claim.
In 2008, Price began working with Dennis Melchior (“Melchior”), a fellow UBS employee with whom he partnered on certain high-value accounts. Id. ¶ 96. By November or December of 2010, Price became aware that Melchior was in a romantic relationship with Palm Beach socialite and UBS client Nancy Tsai (“Tsai”), who in turn was very close to a wealthy, elderly widow named Helga Marston (“Marston”). Id. ¶ 97; Price FINRA Dep. Tr. 75:14- 78:19. Marston moved her trust account (the “Marston Trust Account” or “Account”) to UBS in June of 2011. SUMF ¶ 100. The Account was Price’s largest, though he split the revenues with Melchior who, along with Tsai, were the only two individuals Marston allegedly trusted to discuss her Account with. Id. ¶¶ 103-106; Price FINRA Dep. Tr. 82:10-83:2. Price never met Marston in person or spoke to her over the phone. SUMF ¶ 106. By December of 2011, Tsai had power-of-attorney over the Marston Trust Account. Id. ¶ 99.In April of 2013, Tsai attempted to purchase a $2.35 million condominium with funds from the Account. Id. ¶ 109. The attempted purchase raised several “red flags” at UBS because Tsai was listed as the actual buyer; a manager who attempted to confirm the purchase with Marston over the phone was told Marston was unavailable because she was hard of hearing; and Marston’s signature looked “materially worse” than the other samples UBS had. Id. ¶¶ 109-114. Multiple UBS employees, including Price, contemporaneously raised concerns on or about April 11 or April 12, 2013, about the attempted transaction and Melchior’s reaction when it was declined. Id. ¶¶ 113-115; Trapani Dep. Tr. 23:19-24:1; Cowart Dep. Tr. 34:22-35:9. Price initially notified Complex Director Brad Smithy of his concerns by calling Smithy’s cellphone on either April 11 or April 12 and leaving him a voicemail. Price Dep. Tr. 223:23- 223:25; Pl. Supp. Statement ¶ 40.UBS consequently initiated an investigation into the Marston Trust Account. SUMF ¶ 115. As part of the investigation, UBS Complex Control Officer Tracey Trapani sent an email on April 12, 2013, to local UBS managers, including Smithy, cataloguing activity in the Marston Trust Account “that may be questionable.” Id. ¶ 116. On April 14, 2013, after undertaking his own review of Account transactions, Price also sent an email to Smithy cataloguing charges that he considered “suspicious” and that he connected to items on Melchior’s calendar. Id. ¶¶ 117, 119; Def. Ex. 78 at 1. The email proceeds to identify transactions for which Tsai’s credit card, checkbook, or debit card for the Marston Trust Account was used to pay for what Price believed were inappropriate expenses, such as business expenses related to Melchior’s participation in UBS events and fundraisers. Def. Ex. 78 at 1- 2. Price testified that Smithy forwarded this email to UBS Internal Investigator Saline Gerber, who then interviewed him about his concerns at some later date in April or June of 2013. Compare Am. Compl. ¶¶ 49-51 (“During the days that followed [April 15, 2013], Mr. Price was interviewed by Ms. Gerber.”), with Price Dep. Tr. 214:15-214:17 (“I first blew the whistle complaining about what I knew to be stealing from Helga Marston to [Gerber] in June of 2013.”).UBS promptly terminated Melchior’s employment on April 23, 2013. SUMF ¶ 123. The Palm Beach Daily News reported that Tsai was arrested and charged one year later, in April of 2014, with exploitation of and theft from an elderly person, though the charges were eventually dropped. See SUMF ¶ 130; Def. Ex. 82. In or around July of 2014, Price, along with UBS employees Trapani, Complex Administrative Manager Jan Cowart, and Associate Branch Manager Timothy Durno testified before FINRA in connection with FINRA’s review into Melchior’s conduct. SUMF ¶¶ 124-126. Price also provided FINRA with his daily personal journal entries that he had drafted throughout the investigation detailing what he had learned about Melchior and the suspicious Account transactions. Pl. Resp. to SUMF ¶ 136; Price Decl., Ex. B., ECF No. 120-2. In December of 2014, FINRA completed its investigation and issued Melchior a Cautionary Action Letter as a formal warning with respect to “FINRA Rule 2010, Conduct Inconsistent with Just and Equitable Principles of Trade,” because he had “failed to follow Firm procedures regarding disclosures to the Firm of one or more expenses that were paid using a Firm customer’s funds.” SUMF ¶¶ 127-128.
On February 29, 2016, in light of the results of the Riker Danzig investigation, UBS Complex Director Peter Foley and Branch Office Manager Clifford Mandody informed Price that UBS was terminating his employment for conduct that violated the firm’s policies. SUMF ¶ 83. On March 18, 2016, UBS filed the requisite Form U-5 with FINRA about Price’s termination and briefly explained that Price had violated several UBS compliance policies. Id. ¶¶ 86-87. Although UBS contends it considered Price’s attorneys’ comments in finalizing the language in the Form U-5, Price asserts that the Form U-5 is “materially false.” Id. ¶ 88; Pl. Resp. to SUMF ¶ 88. FINRA subsequently investigated Price’s termination and both UBS and Price responded to FINRA’s requests for additional information. SUMF ¶¶ 90-91, 93. On May 6, 2016, Price, through counsel, also submitted a letter to the Certified Financial Planner Board of Professional Standards detailing the underlying conduct for which UBS terminated him. Id. ¶ 94.
[A]ccordingly, to establish a prima facie case of retaliation under the Subsections articulated above, Price must demonstrate: (1) he engaged in statutorily protected activity; (2) he suffered an adverse employment action; and (3) there is a causal connection between the two events. Berber, 798 F. App’x at 478-79. If Price presents a prima facie case, the burden shifts to UBS to articulate “a legitimate, non-retaliatory reason for the challenged employment action.” Butterworth, 581 F. App’x at 816; Rutledge v. SunTrust Bank, 262 F. App’x 956, 958 (11th Cir. 2008). Then, if UBS meets its burden, the burden shifts back to Price to demonstrate that UBS’s proffered reasons are “mere pretext.” Berber, 798 F. App’x at 479; Butterworth, 581 F. App’x at 816.
There is no dispute that Price suffered an adverse employment action and, as a result, can satisfy the second element of the prima facie case standard. The parties’ disputes center on whether Price can satisfy the first and third elements based on the undisputed material facts and record evidence.
First, there is a significant period of time between Price’s April 2013 reporting of Melchior’s conduct and early 2015 when Price maintains the “harassment” by UBS began. See Pl. Opp. Br. at 15, ECF No. 115. Likewise, there is at least five to six months between Price’s July 2014 testimony before FINRA and early 2015. If Courts have found periods of three to four months between the protected conduct and the adverse employment action to be too long to support an inference of causation, it cannot be that a series of adverse actions commenced five months to one and a half years after the protected conduct supports an inference of causation. See Baroudi, 616 F. App’x at 903 (“A causal relationship might reasonably be inferred from a series of adverse actions that commenced immediately after a plaintiff engaged in protected activity.” (emphasis added)).Price’s proposed causal connection is further undermined by the undisputed fact that Complex Control Officer Tracey Trapani, Complex Administrative Manager Jan Cowart, and Associate Branch Manager Timothy Durno—the three other UBS employees who assisted in the April 2013 identification and investigation of Melchior’s purported misconduct, and who also testified before FINRA in mid-2014—either remain employed at UBS or retired voluntarily. SUMF ¶¶ 134-135. It is also undisputed that the substance of Price’s FINRA testimony was confidential; Foley, Smithy, and Mandody—the UBS employees who collectively made the decision to terminate Price’s employment—were not present at Price’s FINRA testimony and did not discuss the testimony with him. Id. ¶¶ 132-133.Lastly, Price maintains that UBS’s harassment took the form of increased scrutiny into his marketing events and whether they complied with UBS’s Non-Cash Compliance Policy. But in an email dated July 9, 2014, sent to more than one hundred UBS employees, including Price, Foley wrote that “the scrutiny in our business has many levels and some of the more recent regulatory inquiries have branched into non-cash comp.” Def. Ex. 95 at 1. Foley advised employees to ensure they were appropriately recording non-cash compensation because regulators were looking more closely to identify discrepancies. Id. When asked about this email at his deposition, Price testified, “I don’t have any reason to doubt that that’s what the regulatory environment was like. I had heard that from other sources as well.” Price Dep. 212:4-212:19.For these reasons, Price has failed to present evidence from which a reasonable jury could find a causal connection between his April 2013 reporting of Melchior’s conduct, his July 2014 testimony before FINRA, and the termination of his employment on February 29, 2016. He cannot satisfy the third and final element of the prima facie standard and, therefore, cannot establish a prima facie case of retaliation under either Subsection Three or Subsection Two of the FWA.
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