Credit Suisse ‘Raid’ Case Against UBS Americas Marches On
By Jed Horowitz
Published December 14, 2017
Advisor Hub
An unusual “raiding” claim that Credit Suisse Securities (USA) filed against UBS Financial Services two years ago as it was shuttering its U.S. brokerage business is proceeding before a Financial Industry Regulatory Authority arbitration panel.
Hearings have been scheduled from January 16 through March 2 in New York City, according to lawyers who are representing some former Credit Suisse brokers in separate pay-related arbitrations with their former employer.
Raiding cases are rare since the burden of proof is high on the accusing party to prove severe economic impact, and usually involves specific branches or complexes. The Credit Suisse allegations have raised eyebrows further in the securities industry because the Swiss bank announced in October 2015 that it was closing the doors or its U.S. retail brokerage business after reaching an “exclusive recruiting arrangement” to guide its more than 300 brokers to Wells Fargo Advisors.
“A raiding case when someone is shutting down the whole business is absurd and unheard of,” said Rogge Dunn an employment lawyer in Dallas who is representing several former Credit Suisse advisers seeking to receive deferred pay withheld by the Swiss bank and to retain pay that it is trying to claw back.
UBS Wealth Management Americas hired just over 100 of Credit Suisse’s 336 brokers, second only to the 111 who joined Wells Fargo, according to a document reviewed by AdvisorHub.
“Credit Suisse filed it as a brushback pitch to try and scare advisors to go to Wells Fargo,” which was not offering as much upfront money as UBS and other rivals, Dunn said.
Another attorney representing former Credit Suisse brokers said it is difficult to imagine what sort of damages the Swiss bank could claim given their shuttering of the business. Officials at Credit Suisse and Wells Fargo have not disclosed terms of their recruiting arrangement.
Credit Suisse may have hoped that UBS would pressure its new brokers to drop their individual arbitration claims, Dunn speculated, and may be continuing the raiding case as a tactical effort to gain documentation in discovery that it can use in the individual cases.
Some brokers who took the Wells Fargo Advisors deal have complained in recent weeks that the firms have reneged on an arrangement that was to have given them near-exclusive retail syndicate access to equity and debt offerings led by Credit Suisse.
Stephen Kramarksy, a lawyer at Dewey Pegno & Kramarsky in New York who is representing Credit Suisse in the raiding and some related suits, did not return a call for comment, nor did a Credit Suisse spokeswoman.
Carl Mills, a lawyer at Hughes Hubbard & Reed who is representing UBS in the raiding claim, also did not respond to a request for comment.
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