Claiming victory after a rare split decision in a signing bonus dispute before FINRA, a former ex-UBS broker says such payments are the dark side of the brokerage industry.
Gary T. Padussis worked for the Swiss-owned firm for four years until last April. He says he departed after UBS allowed a team member to work for another UBS advisor, despite his objections, resulting in the loss of his clients.
I left, and then they came after me, he says.
UBS filed a claim for more than $1.7 million of the signing bonus Padussis first received. The 28-year veteran counter-filed, arguing that his business and client base was significantly injured when UBS did not abide to the team agreement.
The team agreement specified that any member of the team must provide full time service to the team, Padussis says. I was faced with an impossible situation of owing millions of dollars on a promissory note while watching my client base [get] dismantled by the financial advisor who left the team and by UBS.
On Monday, a FINRA arbitration panel ruled that UBS pay Padussis $933,000 in damages, while ordering him to pay back the $1.7 million remainder of his signing bonus.
"We look forward to collecting the substantial award the panel agreed that Mr. Padussis owes UBS," a company spokesman said. "We are disappointed the panel provided Padussis any award and will review our options."
Despite the split ruling, Padussis, now heading Cape Investment Management in Maryland and New Jersey, considers the matter with UBS unresolved.
Padussis is embracing the role of advisor advocate, calling for the practice of brokerage signing bonuses, which can lock an advisor into a firm for years, to be further examined by FINRA and other industry regulators.
The brokerage business has a duty when a financial advisor may come on board to protect that financial advisor and his clients, he adds. The financial advisor has a duty to perform for the firm. When one side breaks the duty and it cant be fixed, it could lead to the circumstances I suffered.
This is the second contentious signing bonus dispute involving UBS this month. At the beginning of October, a former UBS broker was ordered to pay back the wirehouse $1.75 million of his recruiting bonus the third such million-dollar judgment against him this year. However, the ex-broker says he was justified in breaking his contract with UBS, and also criticized the signing bonus system offered by brokerages.