An Open or Shut Forgivable Loan Case Vexes UBS

February 2, 2011


Street Legal by Bill Singer

Repayment of an EFL rested on whether a UBS branch was permanently closed.

Things just didn't end well between registered rep Dowley and his former employer UBS.  There was that ticklish issue about repayment of an employee forgivable loan ("EFL") and the whole dispute over whether UBS had permanently closed its Aspen, Colorado office where Dowley worked. 

Why was the open or shut nature of the Aspen office so critical?  Well, consider this provision in Dowley's EFL agreement that excused repayment if:

the office in which the Employee is working [was] permanently closed by [UBS], and the next closest [UBS] office is more than 25 miles from the office closed, and the Employee chooses not to relocate to such next closest or to any other [UBS] office.

A Financial Industry Regulatory Authority ("FINRA") Arbitration Panel wrestled admirably with this case.  The evidence seemed evenly distributed between both sides -- and the scales tipped precariously if merely breathed upon.