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June 1, 2022
UBS TO CLAW BACK $2.3M FROM EX-BROKER BUT MUST REVISE TERMINATION LANGUAGE
by Miriam Rozen
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News
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UBS
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Arbitration, clawback, promissory notes, U5 termination
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Updated to include Smith’s attorney’s statement.
A panel of three Financial Industry Regulatory Authority arbitrators ruled in
mid-May that a veteran ex-UBS broker from Atlanta, Georgia must pay back the
wirehouse more than $2.1 million in loans and interest and $208,000 in attorney
fees.
But the panel cut the former broker, Bruce Davis Smith, one break: They called
for UBS to revise the language it had put on his U5 termination form when it
discharged Smith in 2018 and stated allegations against him. Smith, who led a
four-person team with a focus on professional athletes, was fired in 2018 over
what his lawyer at the time characterized as an “overreaction” to a “relatively
minor” event.
The new language still identifies Smith as discharged. But the arbitrators
called for revised wording that modified the reasons for his discharge to make
the language much less specific and eliminate any mention of clients.
According to the BrokerCheck record as it read prior to the May 17 arbitration
award, UBS had written: “FA discharged after admitting making incomplete
disclosures of material information to firm attorneys regarding circumstances
related to client trip, in connection with SEC inquiry in which FA was
questioned as a witness.”
The arbitrators called for that language to be changed to: “FA discharged after
making incomplete disclosure of information to firm attorneys regarding actions
related to regulatory inquiry in which FA was questioned as a witness,”
according to the award signed May 17.
The award did not include an explanation for their decision.
Smith, who could not be reached for comment, is an 18-year veteran, who is no
longer registered but had two separate stints at UBS with a four-year interlude
at Merrill Lynch in between, according to his BrokerCheck record.
The U5 disclosure was “improper, misleading, and destroyed his [client’s]
career,” according to Smith’s lawyer, James Cobb of Caplan Cobb in Atlanta,
Georgia. “While we disagree with the Panel’s decision on damages, this award
exonerates Bruce by ordering that the U5 disclosure be reformed as we
requested. Bruce looks forward to moving on with his life and rebuilding his
career,” Cobb said in an emailed statement.
A spokesperson for UBS did not provide a response to an emailed request for
comment.
According to the award, UBS filed a breach of contract and unjust enrichment
claims against Smith for promissory notes that became due upon his termination.
UBS sought $1,942,170.85, plus accrued interest in damages, as well as
attorneys’ fees.
Smith filed counterclaims, citing as causes of action legal malpractice, breach
of fiduciary duty and defamation, and sought unspecified compensatory and
punitive damages.
The arbitration panel—two public and one non-public arbitrator—awarded UBS
$2,085,586.38 in compensatory damages, and $208,459.20 in attorney fees,
according to the May 17-issued award. It also denied Smith’s counterclaims and
request for damages but it assessed only UBS for the $48,500 in hearing fees.
UBS WIRES $14.1M TO EX-COMPLIANCE OFFICER CAPPING OFF BATTLE OVER DEFAMATION
AWARD
The wirehouse, with its lengthy appeals to vacate an arbitration award, added
about $3 million to the amount it ultimately paid the ex-compliance officer,
thanks to accrual of interest and attorney fees.
Apr 19, 2022
In "News"
$3-MLN UBS BROKER JUMPS TO TEXAS FIRM U.S. CAPITAL UNDER PRESSURE
The broker had become “contentious” during a routine compliance review, but U.S.
Capital lawyers found there was no concern over regulatory or client privacy
violations, the firm’s CEO said.
May 13, 2022
In "News"
EX-MORGAN STANLEY BROKER ACCEPTS BAR IN FINRA PROBE OF MISCODED TRADES
Morgan Stanley had reported on the broker’s U5 that it had discharged him due to
"[c]oncerns that [he] submitted transactions under production numbers that were
inconsistent with [an] agreement with another representative,” Finra said.
May 31, 2022
In "News"
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