The mother of a deceased FA wants to force UBS into arbitration over claims it helped its employee’s girlfriend inherit his estate. Late last month, UBS asked a federal court to toss the request.
No matter who wins, the feud is a warning for wirehouse employees: Just because family members use your assets while you’re alive doesn’t mean they have a right to them when you die.
While Erich Frank, a 15-year UBS veteran, lay dying in a hospice facility, a UBS broker and in-house lawyer helped his live-in girlfriend transfer his assets. The UBS employees also helped redraft his estate documents so she would inherit the bulk of his assets, which his mother had stood to inherit. That’s the scenario according to allegations in litigation filed by Frank’s mother, Phyllis Frank, and his sister, Jayne Tuchman.
The mother and sister want the federal court to compel UBS to appear before a Finra arbitration panel to resolve those claims.
But UBS told the federal court in its most recent brief opposing the family’s request that it could not be compelled under Finra’s rules to appear for such a hearing.
“Mrs. Frank can only bind UBS to arbitrate her claims in limited instances, none of which are present here,” UBS argued in its brief. The mother cannot establish “even by the broadest of definitions” that she is, or ever was a customer of UBS, the wirehouse argued. UBS spokespersons declined to comment for this story.
Before the mother asked the federal court to compel UBS to arbitrate, she had filed a complaint with Finra against the wirehouse. A Finra case specialist on Oct. 1 ruled, however, that her complaint was ineligible to be heard by one of its arbitration panels — a decision that prompted Tuchman and her mother to file their federal court petition.
In its answer to that Finra complaint, UBS representatives said of Frank’s family’s allegations: “Nothing could be farther from the truth.” When he learned in December 2018 that no further treatment would halt the progression of his colon cancer, Erich Frank told a fellow UBS FA and colleague that he wanted his girlfriend to inherit his assets held at UBS and have her be named as a beneficiary on his life insurance policy, claims UBS.
"UBS harassed an employee of the firm on his deathbed to sign financial documents, estate planning documents, wills, and transfer forms purposefully intruding upon the peace and tranquility that ought to have accompanied Erich Frank’s final days. Instead, UBS robbed a man of his dignity and a family of their financial security without cause or reason," Tuchman and her mother alleged in their federal court petition.
For the last 11 years of his life, Erich Frank paid his mother’s mortgage, medical bills, and other expenses, and Phyllis Frank was listed as the beneficiary on all of his transfer on death documents tied to his accounts until he entered hospice care, their petition alleged. New York state law called for his mother to inherit all his assets because Erich Frank didn’t have a will — the circumstances until he entered hospice care — their petition alleged.
Erich Frank was UBS’s White Plains, N.Y., financial complex director, a financial advisor at the branch, and his final title was as managing director, head of Global Leverage and Partnerships within Private Wealth Management.
In November 2017, after he had received his cancer diagnosis, Erich Frank selected his mother as the beneficiary of his UBS life insurance policy, Tuchman and the mother's petition stated.
But after Erich Frank entered hospice care in December 2018, he signed a will that “virtually disinherited his mother,” their petition alleged.
Erich Frank’s newly-drafted will also assigned the role of executor of his estate to a UBS advisor, an assignment that called for the FA to receive compensation, according to their petition. Given that compensation, UBS and its FA should have complied with Finra rules which require reporting of any new outside business activities, their petition argued.
According to notes taken by the hospice staff, once he entered hospice care, Erich Frank was in “no position” to sign a will, as he was “nonverbal,” their petition alleges. In addition to switching the beneficiaries on his accounts, only days before Frank’s death his girlfriend and UBS employees arranged for her to receive a $40,000 line of credit based on his brokerage accounts. His mother and sister characterize that transaction as “stealing.”
But in its Sept. 25 answer to Phyllis Frank’s previously-filed Finra complaint, UBS addressed the substance of Frank’s family’s allegations and offered an alternative chronology of what happened in the weeks before his death.
“As any friend would do in a similar situation,” the colleague “complied” and “worked to set up a call between Mr. Frank and the UBS Benefits Express team,” the UBS answer stated.
The call took place on Dec. 20, 2018, and UBS’s head of benefits and a representative from its third-party vendor of 401(k) services were on it, the answer states. Erich Frank’s colleague and fellow FA only helped coordinate the call and did not otherwise participate in it, the answer stated.
When Erich Frank drafted the new will, also on Dec. 20, only his lawyer and an associate were at the meeting, the answer stated. They “made the independent determination that Mr. Frank was capable of executing a will,” the answer states. The UBS colleague of Frank’s who was named executor “did not become aware of this fact until after the passing of Mr. Frank,” the answer stated.
“Any assertion that any individual from UBS had any input into the contents of Mr. Frank’s will is patently false and unsupported by the facts,” UBS argued in its answer.
“Regardless of whatever inter-family dynamic may be at play here, it is unmistakable that Mr. Frank was mentally competent to make the decisions that he made at the time that they were made,” UBS' answer claims.