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FINRA Panel Awards Nearly One Million Dollars to Financial Advisor in Industry Employment Dispute

By Robert L. Hill, Esq. of Shustak Reynolds & Partners, P.C. posted on Monday, November 3, 2014.

A three-person FINRA arbitration panel recently awarded Maryland financial advisor Gary Padussis nearly $933,000.00 in damages against UBS Financial Services based upon Mr. Padussis’s claims UBS wrongly interfered with his business and client relationships while he was employed at the firm.  The same panel, however, ordered Mr. Padussis to pay UBS nearly $1.7 million for repayment of an up-front forgivable loan Mr. Padussis received when he joined the firm.

The arbitration began in June 2013 when UBS filed a claim for repayment of an up-front promissory note Mr. Padussis signed when he joined UBS in 2009.  These types of up-front forgivable loans are very common in the financial services industry.  The loans often are structured to be forgiven over anywhere from 7 to 12 years, provided the advisor remains with the firm and meets his or her production goals.  But, if the advisor leaves the firm for any reason before the note is fully forgiven, then he or she must immediately repay the remaining outstanding balance plus interest.

In response to UBS’s arbitration filing, Mr. Padussis filed a counter-claim alleging that UBS had interfered with Mr. Padussis’s business and client relationships.  Mr. Padussis requested over $10 million in damages.  Ultimately, the panel awarded UBS the outstanding principal and interest due under the promissory note, in the amount of $1,683,262.69, while also awarding Mr. Padussis $932,867.00 on his counter-claims.  The panel’s decision resulted in a net award to UBS of approximately $767,000.00.

Shustak Reynolds & Partners, P.C.’s attorneys in San Diego, Irvine, San Francisco, and New York represent registered representatives, investment advisers, financial institutions, and others in business and securities disputes.  The firm’s attorneys are particularly experienced in handling FINRA employment disputes involving these types of up-front forgivable loans.  The firm’s web site is www.shufirm.com.

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