$3 Million Awarded In UBS FINRA Employment Dispute

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in January 2015, and as amended thereafter, in connection with his termination of employment by Respondent UBS, Claimant Springer asserted wrongful discharge; negligence; intentional and negligent infliction of emotional distress; unjust enrichment; tortious interference with business relationships; unfair competition; civil conspiracy; fraud; defamation per se; breaches of good faith and fair dealing, and fiduciary duty; violation of FINRA Rule 2010; equity; and unpaid wages. 

Claimant Springer sought compensatory, punitive, and statutory damages, attorneys' fees, and costs. At the close of the hearing, Claimant requested between $63,801,136.00 and $96,545,136.00 in damages, and he requested expungement of the "Reason for Termination" set forth in Section 3 of his Form U5 and that the answer to Question 7F(1) be changed from "YES" to "NO." In the Matter of the FINRA Arbitration Between James L. Springer, Jr., Claimant, vs. UBS Financial Services, Inc., Respondent (FINRA Arbitration 15-00100, October 26, 2017).

Respondent UBS generally denied the allegations and asserted various affirmative defenses.

SIDE BAR: The applicable questions on the Uniform Termination Notice for Securities Industry Registration ("Form U5"):

3. FULL TERMINATION

Is this a FULL TERMINATION?

Note: A "Yes" response will terminate ALL registrations with all SROs and all jurisdictions.

Reason For Termination:

[]Discharged []Other []Permitted to Resign []Deceased []Voluntary

Termination Explanation:

If the Reason for Termination entered above is Permitted to Resign, Discharged or Other, provide an explanation below:

If amending the Reason for Termination and/or termination explanation, provide an explanation below:

. . .

Termination Disclosure

7F. Did the individual voluntarily resign from your firm, or was the individual discharged or permitted to resign from your firm, after allegations were made that accused the individual of:

1. violating investment-related statutes, regulations, rules or industry standards of conduct?

2. fraud or the wrongful taking of property?

3. failure to supervise in connection with investment-related statutes, regulations, rules or industry standards of conduct?

Clarification

In April 2016, Claimant filed a Motion to Clarify and Amend, opposed by Respondent, in which he sought to clarify that:

1. his pre-existing defamation claim included statements made by Respondent UBS on his Form U5, and 
2.  he would  request the expungement of Respondent's defamatory U5 disclosure at the final hearing.

The FINRA Arbitration Decision states that Claimant apparently intended to clarify the U5 expungement issue in order to "prevent Respondent from manufacturing a claim of surprise or prejudice at the final hearing.

In June 2016, the FINRA Arbitration Panel granted Claimant's Motion to Clarify and Amend to include:

•  allegations concerning alleged defamatory statements in Question 7F of the Form U5;
•  a request for expungement; and
•  a claim for unpaid wages.

New Life Sought for Deadlines

Also in April 2016, Claimant filed a Motion to Set New Deadlines, opposed by Respondent, in which he alleged that Respondent had intentionally obstructed his right to Discovery. Respondent asserted that Claimant's misrepresentations of fact warranted the denial of his motion.

In June 2016, the FINRA Arbitration Panel denied Claimants Motion to Set New Deadlines and requested sanctions.

Award

The FINRA Arbitration Panel found Respondent UBS liable on the claim of defamation and ordered it to pay to Claimant Springer $3 million in compensatory damages plus interest from the date of the Award until paid in full.

The Panel denied Claimant's requests for expungement of the "Reason for Termination" from Section 3 of his Form U5 and Question 7F(1).

Bill Singer's Comment

It's not everyday that a FINRA Arbitration Panel awards $3 million in damages to a registered rep, so this is a fairly substantial sum notwithstanding Claimant Springer's larger demands. Similarly, consider that the damages were awarded solely for "defamation," so that must have been one helluva nasty bit of commentary posted by UBS.

It's impossible to figure out just what the Panel deemed defamatory because no such language was cited in the FINRA Arbitration Decision. As I frequently concede, there may well be merit in the arbitrators' opaque approach because presenting the contested language in a Decision when there is a finding of defamation tends to doubly victimize the former employee. Since the arbitrators declined the requested expungement of Springer's Form U5, whatever UBS posted in that document and whatever will remain on BrokerCheck may pose ongoing issues for Springer.

MR. SPRINGER WAS DISCHARGED AFTER HE ACKNOWLEDGED THAT FOR SEVERAL YEARS, HE HAD CAUSED CHARGES ON HIS CORPORATE CREDIT CARD TO BE CHARACTERIZED INACCURATELY SO AS TO PORTRAY CERTAIN OF HIS PERSONAL EXPENSES AS BUSINESS EXPENSES IN ORDER TO GET BACK FUNDS SET ASIDE FROM HIS OWN PRE-TAX EARNINGS TO PAY FOR BUSINESS EXPENSES; NO CLIENT ACCOUNTS WERE HARMED. THE FIRM ALSO CONCLUDED HE GAVE UNSATISFACTORY ANSWERS TO FIRM MANAGEMENT REGARDING MULTIPLE CLIENT EVENTS AND THE FIRM'S NON-CASH COMPENSATION POLICY.

• FINRA
• Arbitration
• Expungement
• wrongful discharge
• defamation
• Form U5
• U5
• Reason for Termination
• Termination Disclosure