Finra arbitrators ordered
UBS Financial Services Inc. to pay more than $11 million to a former supervisor who claimed the firm defamed him in explaining his departure.
A three-person
Financial Industry Regulatory Authority Inc.
arbitration panel awarded Mark Munizzi $3,149,656 in compensatory damages, $7,500,000 in punitive damages as well as $496,753 in attorneys' fees and $24,381 in costs. It also required UBS to pay interest on $112,500 of the compensatory damages as severance pay.
Mr. Munizzi was working as market operations supervisor in the UBS Chicago office in February 2018 when two accounts he was overseeing lost value during a steep market drop.
When Mr. Munizzi was fired in April 2018, UBS asserted that Mr. Munizzi failed to take heed of notification that there were margin calls on the accounts. Mr. Munizzi said he was not notified of the situation.
UBS said he had failed to properly supervise the risks of an uncovered options strategy and also accused him of lying during an internal review of the incident. In his arbitration case, Mr. Munizzi alleged that UBS defamed him describing his termination on his Form U5 and claimed that the language on the document
prevented him from finding a new job in the industry.
The Finra arbitrators found UBS liable. The panel ordered that the reason for his departure on his Form U5 be changed to "terminated without cause" and imposed punitive as well as compensatory damages.
"Punitive damages are unicorn rare in Finra proceedings," said Steven Gomberg, who represented Mr. Munizzi and is of counsel at the law firm Lynch Thompson. "It's really an extraordinary finding."
UBS said it did nothing wrong and will fight the decision.
"UBS strongly disagrees with this unfounded award, which was contrary to the substantial evidence demonstrating that UBS acted properly and consistently with regulatory expectations and its responsibilities to the industry," UBS spokeswoman Erica Chase said in a statement. "UBS cannot understand how the panel could have come to this conclusion. We intend to pursue all avenues to challenge the award."
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Mr. Gomberg said Mr. Munizzi, who has worked in the financial industry for more than three decades without a blemish, was not able to land an interview after his Form U5 was filed.
"We think he was scapegoated" by UBS, Mr. Gomberg said. "We believe the [arbitration] panel believed that a message had to be sent to the industry that employees can't be terminated and have their careers ruined unless there's strong, supportable evidence to do so.
Because records about employment actions are public in the securities industry, "you're not just losing a job, you're being banned from the industry," he said.
Mr. Munizzi filed his arbitration claim in June 2018, and proceedings began a year later. Between June 11 and Nov. 21, there were 26 hearing sessions.
Now Mr. Munizzi, 60, is absorbing the win, according to Mr. Gomberg.
"He's the kind of person you want in the brokerage industry," Mr. Gomberg said. "Whether he'll be employed again is uncertain."
