UBS Wires $14.1M to Ex-Compliance Officer Capping Off Battle over Defamation Award

A drawn-out legal dispute that has spanned four years and multiple appeals has concluded with a $14.1 million wire transfer from UBS Wealth Management USA to a former compliance officer in Chicago.

UBS Financial Services paid the total on April 12 to Mark Munizzi, its former regional compliance manager in Chicago, whom it had fired in 2018. Munizzi sued later that year for defamation and won $11.1 million in an arbitration award the following year.

UBS waged lengthy court battles that were seen as a message to others who may consider taking on the firm in court, but ultimately failed to vacate the award. On March 31, the Supreme Court of Illinois denied UBS its final appeal without offering an explanation.

Because of the lengthy appeals process, UBS added about $3 million to the amount it ultimately paid Munizzi as interest continued to accrue, as well as attorney fees UBS was required to cover under the terms of the award, according to Munizzi’s lawyer Stephen Gomberg of Lynch Thompson in Chicago.

A spokesperson for UBS declined to comment. The firm would have had to petition the U.S. Supreme Court for a hearing to continue with any appeal.

In his arbitration complaint filed in June 2018, Munizzi alleged UBS defamed him on his U5 termination filing, which accused him of failing to supervise employees executing uncovered options strategy in accounts and of giving “varied responses” during the firm’s review of his activities.

Munizzi, who had been earning roughly $200,000 a year, according to his lawyer, asserted that he was not properly informed by the firm’s central supervision office of margin calls against brokers in UBS’s Madison, Wisconsin branch. He had been one of several fired in the wake of a junior broker’s naked options trades that were said to have cost $3.7 million in losses in employee-related accounts.

In the December 2019 award, which was the largest employee arbitration penalty that year, the Financial Industry Regulatory Authority arbitration panel had ordered UBS Financial Services to pay Munizzi $7.5 million in punitive damages, $3.1 million in compensatory damages for severance and almost $497,000 of attorneys’ fees—a total of about $11.1 million.

In January 2020, a court upheld the award and entered a judgment for $12,177,360, which included an additional $908,965 of statutory interest and attorneys’ fees and costs of $97,604, Gomberg said. The judge in that case also did not provide a written explanation, although courts are often deferential to arbitrators and have narrow grounds to overturn awards.

Munizzi was “very much relieved” with UBS’s final payment and he “has enough money to retire,” but he had been through an ordeal, Gomberg said. The U5 mark-up left him unemployable, according to the lawyer.

“He hasn’t gotten a job, or even gotten an interview,” Gomberg said.

The favorable outcome could embolden others to bring cases, according to Gomberg, who said he has seen signs of an “uptick” in employment disputes between brokerages and brokers relating to terminations as well as complaints filed with defamation claims.

Since the news of Munizzi’s initial win before the Finra panel first surfaced, firms have also begun issuing more “carefully worded” U5s to avoid defamation claims, he added.

Source: Advisorhub

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