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Arbitration Panels Orders UBS Financial Services to Pay $7.8 Million to a Couple and their Business


According to reporting from Advisor Hub, an arbitration panel has ordered UBS Financial Services — one of the largest brokerage firms in the United States  — to pay a Florida couple and their business nearly $8 million in financial compensation (FINRA Office of Dispute Resolution Case Number: 16-02528).

The couple sustained major losses after investing in government bonds that were recommended to them by financial professionals at UBS Financial Services. Here, our West Palm Beach arbitration lawyers review the decision from the arbitration panel and explain how securities arbitration typically works in the United States.

The Decision: Broker is Liable for Recommending Unsuitable Investments 

The investors in the case raised several different specific complaints against the brokerage firm. Most notably, they argued that UBS Financial Services breached its fiduciary duty and made unsuitable investment recommendations. The underlying dispute in this arbitration proceeding involves Puerto Rico government bonds. These municipal bonds, which sustained huge losses in recent years, were often marketed and sold as ‘safe’ and ‘secure’ investments.

Under securities industry rules, brokers must ensure that they are offering investments that are reasonably consistent with the investor’s risk tolerance, financial position, and individual investment objectives.

Puerto Rico government debt has been downgraded many times by industry experts. Beyond that, since 2015, the Puerto Rican government has defaulted on a number of different bond payments. In reviewing the allegations, the San Juan, PR-based FINRA arbitration panel found in favor of the claimants, awarding the investors $7.8 million in financial damages.

How Does FINRA Arbitration Work  

With some limited exceptions, most disputes between an investor and a financial advisor or between an investor and a brokerage firm will be handled through arbitration. In the United States, licensed brokerage firms almost invariably require their customer to sign agreements that contain a binding and enforceable pre-dispute arbitration provision. The securities arbitration process is handled by a self-regulatory organization called the Financial Industry Regulatory Authority (FINRA).

FINRA is responsible for overseeing securities arbitration and securities mediation. Similar to other arbitration forums, FINRA arbitration is somewhat like a mini, efficient trial. At the same time, the FINRA arbitration process has some unique rules and regulations. If you are filing a claim against a financial advisor or a brokerage firm or if you are defending such a claim, it is essential that you seek representation from an experienced Florida arbitration attorney. Your attorney will be able to ensure that your rights and interests are fully protected at every stage of the arbitration process. 

Get Help From Our West Palm Beach, FL Arbitration Lawyers Today

At Pike & Lustig, LLP, our South Florida business attorneys represent individuals and companies in a wide range of arbitration proceedings. If you need help with a FINRA arbitration case, please do not hesitate to contact us for a fully private initial consultation. We have offices in West Palm Beach, Wellington and Miami, and our law firm serves communities throughout Florida.





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