By Kara Siegel of Shustak Reynolds & Partners, P.C. posted on Thursday, December 19, 2019.

Kara Siegel

Senior Attorney

Last week, a panel of FINRA arbitrators ordered UBS Financial Services Inc. to pay over $11 million to a former supervisor, including $7.5 million in punitive damages, for defaming him on his Form U5 and thus preventing him from obtaining alternative employment.

Mark Munizzi worked as market-operations supervisor in UBS’s Chicago office. In February 2018, the market dropped sharply, and two accounts Munizzi oversaw lost significant value. UBS fired Munizzi in April of that year. UBS asserted that Munizzi had failed to respond to a notification of margin calls on the two accounts; Munizzi said he was provided no such notification. UBS also said that Munizzi had failed to properly supervise the risks of an uncovered options strategy and lied during an internal review of the incident.

Munizzi sued UBS, alleging that his former employer defamed him in describing his termination on his Form U5–thereby preventing him from finding a new job in the industry–and failed to pay him all monies owed.

The panel agreed with Munizzi.

The panel found that UBS had defamed him in completing his U5. The panel ordered that UBS amend Munizzi’s U5 to indicate that he was terminated without cause, expunge the Reason for Termination provided by UBS, and expunge the “Yes” answers to Disclosure Questions regarding internal reviews and termination.

The panel further awarded Munizzi: $3,149,656 in compensatory damages; 5% interest on $112,500 of that amount, which the panel found to comprise severance pay, through the date of payment; $7,500,000 in punitive damages; $496,753.36 in attorneys’ fees; $24,381.50 in costs; and his $375 filing fee.

UBS has indicated that it will challenge the award.

Earlier this year, Shustak Reynolds & Partners represented two brokers in a similar suit for wrongful termination, breach of contract, and defamation against USAA Financial Advisors. A FINRA panel ordered USAA to pay its former employees $1.8 million, including $700,000 in punitive damages, and to change the reason for termination on each broker’s Form U5 to “voluntary.”

These cases show that FINRA takes very seriously the defamation of FINRA-registered brokers and investment advisors.

Shustak Reynolds & Partners, P.C. has extensive experience representing brokers and financial advisors in recruitment, employment, and wrongful-termination disputes, promissory-note claims, and FINRA arbitrations and regulatory proceedings. Contact us today for a complimentary consultation.

Shustak Reynolds & Partners, P.C. focuses its practice on securities and financial services law and complex business disputes. 
We represent many broker-dealers, registered representatives, investment advisors, investors and businesses. 
Attorney Kara Siegel can be reached in the firm’s San Diego office at (619) 696-9500.

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