Broker Suing UBS in Whistleblower Case Wins Some Expungements
A former UBS private wealth management broker in Stuart, Florida who has been pressing a wrongful termination case against the firm has removed some red marks from his BrokerCheck history.
A Financial Industry Regulatory Authority arbitration panel on Monday granted Craig D. Price’s request to expunge four customer complaints from his record that related to sale of auction-rate securities, a product marketed as highly liquid that collapsed during the financial crisis of 2008. UBS reached a $22 billion settlement with the Securities and Exchange Commission over its sale of the products and followed up with an additional state settlement, absolving most brokers of individual responsibility for the product’s sales.
Price, now a registered investment adviser at Great Lakes & Atlantic Wealth Management and Advisory Partners, did not return a request for comment on the award or on his motivations for filing the expungement complaint against UBS last April. UBS did not oppose the expungement requests, but continues to engage in a courtroom battle with Price over a more provocative issue.
Last March, Price sued UBS in federal court for wrongful termination that he alleged was prompted by his testimony to Finra lawyers. He alleges that the firm’s dismissal violate both federal and state whistleblowing laws.
UBS reported on his U5 that it fired him in February 2016 over allegations of insider trading in a low-priced security, according to BrokerCheck, but Price alleged in his lawsuit that the firm was retaliating because he complained to regulators and law enforcement authorities that a former advisor on his team at UBS’s Stuart, Florida, branch was stealing from the account of an elderly client to put on seminars and sponsor charitable events in Palm Beach, Florida, alongside the firm.
UBS in November lost its attempt to have a federal judge in New Jersey dismiss the lawsuit, and is now seeking to transfer the case to Finra arbitration. Neil Henrichsen, Price’s lawyer in the whistle-blowing lawsuit, did not return a call for comment.
John D. Stewart, who represented Price’s in the auction-rate expungement complaints, said that the arbitration was unrelated to the whistleblowing complaint. He declined to comment on whether Price is seeking to clear any of the other six customer complaints on his regulatory record, none of which involve auction-rate securities.
The three-person arbitration panel unanimously ruled that Price was not liable for misrepresenting auction-rate securities to customers or for other violations because he relied on the firm’s analysis of the products as being as safe as certificates of deposit, according to the award decision.
“An investment-related practice violation resulted, if at all, from the firm’s flawed analysis,” the panel wrote in the award decision. “Claimant [Price] played no party in the firm’s analysis of the ARS product and was not, therefore, involved in the sales practice violation that may have occurred.”
Finra, supported by state regulators, has recently proposed rule amendment making the expungement process more onerous and an “extraordinary remedy,” citing the customer-protection value of disclosing complaints. The amended rule would, among other things, make it much more difficult to expunge complaints that are more than one year old.
Lawyers and advisers who support the right to expunge complaints that unfairly taint a broker’s character and performance say the auction-rate issue highlights their arguments for preserving the status quo.
“I have been registered with your organization since 1992 and have experienced firsthand how customer complaints can be driven by a firm-wide decision (keeping complaints on auction-rate preferred claims, which were reimbursed in full by firms) or untrue allegations,” William Leven, a Houston-based broker at Merrill Lynch’s private banking and investment group wrote in a comment letter to Finra on its proposed rule amendment.
All but one of the six customer complaints on Leven’s BrokerCheck record involve auction-rate securities or structured notes issued by Lehman Brothers that helped precipitate the 2008 financial crisis.