Three former UBS advisors are getting something of a clean slate.
Twenty-eight client complaints related to Puerto Rico bonds and closed-end funds will be expunged from their FINRA BrokerCheck records, according to the decision of an arbitration panel.
The decision handed down this week is part of the legacy of the fallout from Puerto Rico's bond crisis and the performance of UBS closed-end funds. At 40 pages, the arbitration award was unusually long.
"We had a week of hearings. The panel asked tough questions. It was by no means a rubber stamp in any way, shape or form," says Jenice Malecki, an attorney who represented the advisors.
The case was originally filed in 2015 by nine advisors seeking $30 million in damages from UBS, which they accused of breach of contract, unjust termination, failure to pay severance and defamation, among other misconduct. UBS denied the allegations in its FINRA arbitration response, according to a copy of the award.
The group included: Alexandra Amador, Carlos Caban, Warynex Carlo, Pedro Martinez Parsi, Jorge Medina, Angel Morey-Noble, Jorge Pesquera, Alberto Rosario and Jose Zorrilla.
A year ago, the brokers and UBS settled the matter, according to arbitration records.
Malecki declined to discuss details of the settlement, citing a confidentiality agreement.
UBS also declined to discuss the case, citing the terms of the settlement.
In March, three of the advisors ― Morey-Noble, Zorrilla, and Caban ― filed a list of expungement requests to the panel of three arbitrators, who granted 28 out of 30. Morey-Noble and Zorrilla are currently registered with Nationwide Planning Associates and Kovack Securities, respectively, according to FINRA BrokerCheck records. Caban has not been registered with a firm since parting ways with UBS in 2014.
"It's bad for business to have these customer complaints when people look you up," Malecki says.
For its part, UBS did not oppose the expungements, according to a copy of the arbitrators' decision.
Clients also did not oppose the expungements. In some cases, they supported it, according to Malecki, who added that the cases were more about the performance of UBS's funds than the actions of the brokers.
Malecki handled the case along with Benjamín Quiñones Lebrón, an attorney based in Puerto Rico, and law firm Harris, St. Laurent & Chaudhry.
Malecki says she's representing brokers in similar cases.
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The firm filed a motion arguing one of its ex-brokers did not challenge the proceedings until after the panel ruled against her.
July 31 -
The dispute centered on the firm’s handling of Puerto Rican municipal bonds.
July 24 -
One JPMorgan client thought it was “odd and weird” that the advisor called during the Memorial Day holiday, on behalf of Merrill Lynch.
June 19
For several years, UBS has been dealing with fallout from the bottoming out of market prices for Puerto Rico municipal bonds in 2013. The firm's closed-end funds of such bonds suffered as a result. Subsequently,
In the company's most recent earnings report, UBS said it faced aggregate claimed damages of $2.6 billion in these arbitration cases. Approximately $1.6 billion of those claims have been resolved through settlements, arbitration or withdrawal of the claims, according to UBS.
The company also faced regulatory scrutiny over the matter.
Processing the arbitration claims and expungement requests has been a challenge for FINRA, which needed to find additional arbitrators to hear the cases.
Hurricane Maria, which devastated Puerto Rico, forced the regulator to
