Finra arbitrators ordered UBS Financial Services Inc. to pay $555,000 to an elderly Texas widow who claimed she lost hundreds of thousands of dollars in her individual retirement accounts due to unsuitable investments.
Betty H. Bailey alleged that William Andrew Hightower sold her investments that included two private placements – Isospec Technologies and Reproductive Research Technologies – that were part of a Ponzi scheme. He also sold her a bogus "private annuity."
Mr. Hightower was a broker at UBS in Houston from 2007-13, according to
his BrokerCheck profile. Ms. Bailey opened her account there in 2007, according to her attorney, David Miller, a senior associate at Shepherd Smith Edwards & Kantas.
Mr. Miller also identified Mr. Hightower as her broker. He was not named in the Finra arbitration award.
Mr. Hightower recommended to Ms. Bailey unsuitable structured products and leveraged and inverse exchange traded products. In 2012, he started selling his own private investments to her, Mr. Miller said.
Mr. Hightower, who was president of Hightower
Capital Group, left UBS in 2013. The Financial Industry Regulatory Authority Inc. barred him from the industry in 2015. In 2018, he was
indicted by the U.S. Attorney's Office for the Southern District of Texas.
The 13-count indictment alleged Mr. Hightower took $10 million from clients between 2013-18, promising to invest it in legitimate projects and instead pouring it into a Ponzi scheme and using it for personal expenses.
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The three-person all-public Finra arbitration
panel held UBS liable for the unsuitable investments, awarding Ms. Bailey $530,000 in compensatory damages and $25,000 in costs.
"We thought it was a fair result that went a long way to undo the harm done to Ms. Bailey," Mr. Miller said. "She was a sweet woman who was clearly taken advantage of by a trusted broker."
Ms. Bailey will turn 91 on Sept. 15.
UBS said it didn't know about Mr. Hightower's activity.
"UBS respectfully disagrees with the arbitrators' award," UBS spokesman Peter Stack wrote in an email. "This case involved a former UBS broker who, without UBS' knowledge, improperly sold investment products that were not approved by UBS to customers of his, several of whom were not even UBS customers when they bought the investment. UBS was unaware of any of these sales and did not approve them."
