UBS Loses Out in Arbitration Proceedings

UBS Loses Out in Arbitration Proceedings

A group of investors in the US have filed claims for damages against UBS Financial Services and one of its financial advisors. An arbitration tribunal of the US authority Finra has now awarded the investors compensation.

The Finra (Financial Industry Regulatory Authority) arbitration tribunal has awarded a group of nine investors a total of $92.2 million in damages. The dispute relates to losses from a short-selling strategy on Tesla shares, which resulted in high losses in the period from September 2019 to July 2020, according to the Finra award.

The plaintiffs had accused the financial advisor and UBS FS of recommending that investors hold the short positions, even though these securities did not match the clients’ risk profile, writes the internet portal «investmentnews.com».

The nine investors were awarded a total of $92.2 million in damages. Of this, $69.1 million are punitive damages for UBS FS.

UBS Plans Legal Action

«The arbitration award points to significant supervisory problems at UBS», a plaintiff's lawyer is quoted as saying in the article.

UBS does not agree with the decision of the three-member arbitration tribunal, a UBS spokesperson is quoted as saying. «These experienced investors had pursued an aggressive short-selling strategy for years at a profit and only complained when they suffered losses,» said the UBS spokesperson. UBS will have the arbitration award reviewed in court. The punitive damages would not be compatible with the law.

The investors had initiated the proceedings against UBS and the financial advisor in 2021. The investment advisor from Wisconsin has reportedly worked for UBS and its predecessor companies since 1984.