A three-person Finra arbitration last week awarded $92.2 million in damages to a group of nine investors alleging that UBS Financial Services Inc. engaged in a high-risk trading strategy connected to a financial advisor shorting shares of Tesla Inc., InvestmentNews reports.
UBS Financial Services was found liable for 75% of the total in punitive damages, or $69.1 million, to the claimants, with the remaining $23.1 million awarded in compensatory damages. On Monday, a UBS spokesperson said the firm disagreed with the decision made by the panel, which operated under the aegis of Finra Dispute Resolution.
The UBS spokesperson said, “These experienced investors had been pursuing an aggressive shorting strategy profitably for years and complained only after they took losses. We intend to seek judicial review of the award on the basis, among other grounds, that the punitive damages were inconsistent with the facts and the law.”
The UBS clients’ claim was filed in 2021 against the firm and veteran financial advisor Andrew D. Burish, who is based in Madison and has reportedly worked at UBS and its predecessors since 1984.
The clients alleged that Burish “recommended an unsuitable and risky strategy of selling the stock of Tesla short and recommended that they continue to hold the positions in the face of mounting losses.”
Burish is liable for a total of $5 million in damages but, according to BrokerCheck, “adamantly” denied the allegations. According to the arbitration award, Burish is liable for $4.5 million in compensatory damages and was also ordered to pay $500,000 in punitive damages.
In legal terms, compensatory damages are awarded to a victim to compensate them for their losses incurred due to a wrongful act, while punitive damages are awarded on top of compensatory damages to punish the defendant for egregious or malicious behavior, aiming to deter future similar actions.
