UBS Financial Services Inc. last week was denied its motion to vacate a $92 million arbitration claim it lost last year to clients, closing the firm’s efforts to not pay damages for an industry arbitration award which it deemed unfair.
A group of nine investors in February 2025 were awarded $92.2 million in damages after alleging UBS engaged in a high-risk trading strategy linked to a financial advisor shorting shares of Tesla Inc. (Ticker: TSLA).
The arbitration panel last year found UBS Financial Services liable for $69.1 million, or 75% the total, in punitive damage to the claimants: Dennis, Leslie, Tyler and Noelle Hansen; Bradley and Jordan Nelson; Lindsey and Nicholas Valentini; and Mark Kramer.
Punitive damages indicate that a Finra panel wants to punish the defendants for conduct and behavior.
U.S. chief district judge Stephanie M. Rose of Iowa on Thursday denied UBS’ motion to vacate, which it filed last year, as well as granting the clients’ petition to confirm the arbitration award.
This was a likely outcome for UBS; industry lawsuits typically fall under the aegis of FINRA Dispute Resolution Services and the likelihood of a federal judge overturning an arbitration panel’s decision is almost nil.
Stifel Financial this year lost in its attempt to overturn an arbitration panel’s decision to award clients $133 million in damages and legal fees.
“UBS is disappointed by the court’s decision, which we respectfully disagree with,” a company spokesperson wrote in an email Monday to InvestmentNews.
“UBS has failed to carry its “heavy burden” of demonstrating that the panel exceeded its authority by imposing a grossly excessive punitive damage award in violation of public policy,” Rose wrote.
UBS has a history of costly litigation with clients stemming from the sale of volatile investment products, from its YES options strategy to Puerto Rico bonds and bond funds to Lehman Brothers structured notes.
The UBS clients’ claim against the firm and a veteran financial advisor, Andrew D. Burish, was filed in 2021. Burish is based in Madison, Wisconsin, and has worked at UBS and predecessors since 1984, according to his BrokerCheck profile.
Burish is liable for $3 million in damages.
The UBS clients alleged that from September 2019 to July 2020 Burish “recommended an unsuitable and risky strategy of selling the stock of Tesla short and recommended that they continue to hold the positions in the face of mounting losses,” according to the advisor’s BrokerCheck profile.
Burish “is a self-identified ‘risk taker’ who built a successful practice managing $3.8 billion in client assets,” according to Rose’s court order.
“If the court accepted UBS’s argument, it would open the courthouse doors to every losing party following an arbitration award of punitive damages,” Rose wrote. “Moreover, it would effectively permit litigants to end-run the prohibition on judicial reconsideration of the merits of an arbitration award.”
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