Following a relationship turned sour, UBS Financial Services Inc. has been ordered to pay $2.8 million to a recruiter once employed by the firm.
The award was decided in favor of the claimant, Jeffrey Kane Bischoff, on Dec. 29 by a panel of Financial Industry Regulatory Authority arbitrators.
In his petition, Bischoff requested no less than $1.9 million from damages related to a breach of contract. In addition, Bischoff also requested unspecified reimbursement for damages related to unjust receipt and retention of his services, as well as related expenses including attorney’s fees.
More specific details about the proceedings, which first began in July 2009, were not disclosed.
With the decision, Bischoff is set to receive $2.8 million from UBS, plus 9% annual interest from Jan. 1 until it is paid. In addition, UBS is also to reimburse Bischoff $600 for arbitration filing fees.
Bischoff took on the national recruiting position at UBS’ private wealth management division in 2007, after previously serving as a recruiter at Citi Smith Barney. Bischoff was employed at UBS until June 2009.
Bischoff, who now runs his own financial services recruiting firm, Old Greenwich Consultants, declined to comment for this article. His lawyer, Ross B. Intelisano, partner at Rich & Intelisano LLP, also declined to comment.
“UBS disagrees with the panel’s decision on this matter and is exploring options,” said UBS spokesperson Karina Byrne, who did not elaborate.
In keeping with the FINRA arbitration process, UBS has the right to petition to vacate the award.
“FINRA got this $1.9 million figure from somewhere,” which probably included a compensation scheme based on completed recruitments, said Rob Herskovits, a partner at Gusrae, Kaplan, Bruno & Nusbaum PLLC. “An award in excess of that number is unusual.”
Recruiters bringing cases against firms is also unusual, Herskovits said, as most are not typically employed in house. Most disputes between recruiters working as headhunters for firms are often settled pre-litigation or in court, he said.
UBS’ hiring of Bischoff in 2007 reflected the firm’s broader strategy to grow its U.S. wealth management practice at that time.
Since then, UBS’ wealth management division has contracted with the changing market landscape. The firm’s wealth management arm reported $506.9 million in pre-tax profits in the third quarter, down from $678 million in the second quarter.
UBS has been proactively hiring for wealth management positions in the last several months, most recently adding six new advisors for its California, New Jersey and North Carolina locations.