UBS Seeks to Overturn $95 Million FINRA Award Over Tesla Shorting Strategy
From the desk of Jim Eccleston at Eccleston Law
UBS Wealth Management USA has filed a petition in federal court to vacate a nearly $95 million FINRA arbitration award, arguing the decision overstepped legal bounds and imposed punitive damages that defy Iowa law, as reported by AdvisorHub.
The case stems from allegedly unsuitable investment advice provided by UBS veteran Andrew Burish. According to the arbitration award issued in February, Burish encouraged a wealthy family to short Tesla stock during 2019 and 2020—an aggressive, high-risk strategy. AdvisorHub reports that the panel found that Burish continued recommending the strategy even as the investors faced significant losses. As a result, the arbitrators ordered UBS to pay $92.2 million in total, with Burish personally liable for nearly $3.1 million.
UBS claims the award exceeds the authority granted to the panel under the Federal Arbitration Act. The firm argues that the nearly $70 million in punitive damages is grossly disproportionate and inconsistent with Iowa’s public policy, especially since the investors had only sought $36 million in total damages. According to AdvisorHub, UBS asserts that a punitive award matching the $23 million in compensatory damages would be more appropriate. Alternatively, the firm asks the court to vacate the entire award.
While UBS presses its case in court, legal experts note that efforts to overturn arbitration awards face a high bar. According to AdvisorHub, courts generally show strong deference to FINRA panels and rarely finds punitive damages excessive unless they far surpass compensatory amounts.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, finra
