Fired UBS Advisor Claims Retaliation for Whistleblowing
A Florida broker who worked at UBS Financial Services for 15 years filed a wrongful termination whistle-blowing lawsuit against the firm in federal court on Monday, claiming he was fired for cooperating in investigations of elder abuse by a former colleague against a UBS client.
Craig D. Price also charged that UBS violated federal law by failing to file Suspicious Activity Reports with the government after he told managers that the colleague and his girlfriend—the former wife of legendary financier Gerald Tsai—were using her power of attorney over the UBS-domiciled trust account of an “extremely wealthy” childless widow in her nineties to advance UBS’ image and her paramour’s career by patronizing and sponsoring charitable events in the Palm Beach area with the client’s money.
Price, who worked in UBS’s “private wealth management” unit for wealthy clients in Stuart, Fla., accused the firm of conducting a “campaign of retaliatory harassment” after he was deposed in a Finra investigation of his colleague. UBS began creating barriers to healthcare seminars he had previously conducted without obstruction, according to the lawsuit.
UBS also held him responsible for a $14,500 settlement it made with a former client over a penny-stock recommendation that the firm had previously dismissed and that it cited as a pretext for his firing on his U-5 termination papers, the lawsuit said.
The suit, filed in federal court in the District of New Jersey’s Newark division, asserts two counts of whistle-blowing violations under the federal Dodd-Frank Act and a Florida state statute, unusual claims in the brokerage industry.
“Those are very rare,” said Curtis Carlson, an employment lawyer in Florida who was unfamiliar with the Price case. Large firms have strong compliance departments that are fairly well insulated against charges of systemic fraud, he said.
A spokeswoman for UBS did not respond to a request for comment on the lawsuit.
“We’ll let the lawsuit speak for itself,” said John Finotti, a spokesman for Price.
The lawsuit liberally cites names of the top brass of UBS’s U.S. wealth management unit.
In early 2013 Price notified Brad Smithy, then a complex manager and today one of three division directors at the firm, of his suspicions that colleague Dennis Melchior and his girlfriend Nancy Tsai were raiding the elderly client’s trust account. He made the allegations after reviewing how credit card and account transaction statements of the trust correlated with Melchior’s business calendar, the lawsuit said.
The broker allegedly documented six charitable events sponsored or supported by UBS in the first quarter of 2013, including purchasing a table at a ball held at Mar-a-Lago in Palm Beach, and found “many instances of events to benefit UBS directly or to benefit Melchior….which were authorized by Ms. Tsai” and paid from the trust account, the lawsuit said. He sent details in an email to Smithy, with a copy to UBS Private Wealth Management head John Mathews, the lawsuit said.
When UBS fired Price on February 29, 2016, his complex and branch managers said the “decision to terminate his employment went all the way to the top, to Tom Naratil, the new President of UBS Americas, Inc.,” according to the lawsuit.
The lawsuit did not directly explain why Price’s charges would be so inflammatory to the firm.
Price, now an investment adviser rep and certified financial planner affiliated with Great Lakes & Atlantic Wealth Management in Stuart, began his brokerage career with IDS Life Insurance Co. in July 1988 and also worked at Prudential Securities and Legg Mason before joining UBS in 2000.
Over his 22-year brokerage career, he accumulated nine customer complaints, seven of which were settled and two denied, according to his BrokerCheck history. The webpage for his current practice asserts that Price Wealth Management is an RIA, “a deliberate choice to move away from the environment of traditional brokerage and investment banking firms” with “a fiduciary duty in how it manages each client’s wealth.”
UBS discharged Melchior in April 2013 for loss of “management confidence” relating to conflct-of-interest concerns involving a trust account, according to his BrokerCheck history. The lawsuit said the firm never amended Melchior’s U-5 termination filing to “accurately reflect his financial exploitation” of the elderly investor.
Melchior, who the lawsuit said was promoted by UBS in January 2013 and authorized by Smithy to move from Price’s office to a Palm Beach branch, is currently an independent registered investment adviser, according to regulatory records. He could not be reached for comment on the lawsuit.
Tsai was arrested by Palm Beach police in April 2014 by local police for “conning a 92-year-old woman muddled by Alzheimers” out of millions of dollars after Finra investigators contacted local welfare authorities, according to a local press report. In October of that year, a Florida state attorney dropped all charges against her, saying he lacked sufficient evidence to prosecute her, the paper said.
Price gave “extensive” testimony in a deposition in August 2014 to Finra investigators looking into Melchior’s activities, according to the lawsuit, and was later asked by a UBS lawyer to give the firm his detailed journal entries about the broker so it could respond to additional inquires from Finra.
In subsequent months UBS compliance officials began questioning the marketing of dinner seminars Price held for prospects and clients, and interrogating him about the client’s complaints over the penny-stock recommendation, the lawsuit said.
—Mason Braswell contributed to this story.