UBS falls short in bid to overturn $95.3M arb award

UBS has again learned that courts have little interest in overturning multimillion awards handed down by industry arbitration panels.

UBS went down to defeat Thursday in its request for the vacation or reduction of a $95.3 million penalty handed down in March 2025 over one of its broker's investment recommendations. A three-member panel overseen by the Financial Industry Regulatory Authority hit UBS with that unusually large award after finding that an advisor named Andrew Burish had inappropriately recommended his clients short Tesla stock, or bet the shares would fall in value.

In the order, Stephanie M. Rose, chief judge for federal court in the Southern District of Iowa, found that UBS had "failed to demonstrate that the arbitration panel exceeded its authority or so imperfectly executed its powers as to act contrary to public policy."

Rose added: "In the absence of any statutory authority to modify or vacate, the Court must confirm the award." 

A UBS spokesperson said the firm "is disappointed by the court's decision, which we respectfully disagree with."

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Stifel, UBS cases show courts' reluctance to second-guess arbitration awards

UBS' defeat follows closely on two other similarly rejected longshot attempts to get large arbitration awards overturned. In March, Stifel failed in its requested vacation of a landmark $132.5 million penalty stemming from recommendations from a now barred broker named Chuck Roberts. Stifel has since said it plans to reach a settlement over the award, the largest ever handed down to retail investors in a FINRA arbitration.

Just over a week before that, UBS was defeated in a separate overturn attempt aimed at a $1 million arbitration award in June over its firing of a broker named Randy Anderson nearly five years earlier. The judges in all these cases have noted that courts are usually very reluctant to second-guess decisions made by arbitration panels.

In the latest UBS ruling, Judge Rose noted that, "The Federal Arbitration Act 'establishes a liberal federal policy favoring arbitration agreements.' … Consistent with that policy, a court's 'scope of review of the arbitration award itself is among the narrowest known to the law.'"

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UBS, clients acknowledge judicial review of arb awards 'is very limited'

Brokerages usually have agreements with their clients making arbitration, rather than courts, the default means of resolving legal disputes. Rose noted that UBS had just such an agreement with the clients — mostly members of an extended family led by the prominent Iowa business couple Dennis and Leslie Hansen — in its latest dispute.

Quoting from the contract, Rose wrote that the parties had "acknowledged that judicial review of 'an arbitration award is very limited.'"

Rose wrote that the FINRA arbitration panel in the Hansen case reached its conclusions following 39 days of hearings, "during which Claimants presented substantial evidence that [UBS'] actions contravened UBS guidance, FINRA rules, and common law duties."

Rose noted that Burish, the broker at the center of the case, is a "self-described risk taker" who was the only advisor in his office in Madison, Wisconsin to recommend shorting Tesla stock. She said the claimants in the case presented evidence suggesting that he continued pushing the investment strategy even after they had begun to lose substantial sums of money.

"Between June 2017 and July 2020, Burish made 878 phone calls, left voicemails with price predictions, and sent 885 private text messages to Claimants," Rose wrote. "Almost half of those communications occurred after September 27, 2019, a critical period during which Claimants suffered their most significant losses, and a substantial number violated UBS policy and FINRA rules."

In a statement on his FINRA BrokerCheck page, Burish wrote that the clients making claims against him "Were wealthy and experienced investors who were well advised by both me and my supervisors of the substantial risks of short selling Tesla, and chose to initiate and hold their positions in the face of high volatility and eventual losses." 

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UBS raises questions about nearly $70 million in punitive damages

Like the $132.5 million arbitration award in the case involving Stifel, most of the $95.3 million penalty in the UBS case consisted of punitive damages. Punitive damages — which came to $69.7 million for UBS — are generally meant to punish egregious misconduct and deter future violations of the same sort. 

UBS argued that the arbitration panel in its case failed to meet its statutory obligation to justify any punitive damages it hands down in writing. But Rose noted in her order that most FINRA arbitration awards come with no written explanation unless both parties to a dispute request one.

Rose said UBS seemed to be arguing that the arbitrators in its case violated its due process rights when imposing punitive damages. But she noted that due process rules apply only in court, not in arbitration proceedings.

"If the Court accepted UBS's argument, it would open the courthouse doors to every losing party following an arbitration award of punitive damages," she wrote. "Moreover, it would effectively permit litigants to end-run the prohibition on judicial reconsideration of the merits of an arbitration award."