A 54-year-old ex-RIA says UBS discriminated against him because of his age — even after he brought them $75 million in new business.
Matthew Farkas' lawsuit alleges that he brought tens of millions of dollars in new client assets to the wirehouse because its management promised that if he delivered a set amount of new client assets, then he would be hired to work as an FA in its private wealth channel.
But ultimately a UBS manager, who expressed concerns about Farkas’ age, rejected plans to hire him because of his age and heart condition, Farkas alleges in a lawsuit.
In an answer filed this month in federal court, where UBS asked to have the litigation transferred, the wirehouse denied the allegations and asked the judge to toss Farkas’ claims, which include, in addition to age bias, breach of contract, fraud, and failure to pay wages.
"Having removed the matter to federal court, UBS will vigorously defend against these meritless claims," a UBS spokesperson writes in an emailed response to a request for comment for this story.
The narrative supporting Farkas’ allegations, however, likely will draw interest among many FAs because it describes in detail how UBS allegedly structures its compensation for newcomers.
In his lawsuit, Farkas describes himself as “54 years old with a heart condition” and states that he “did not ‘fit the mold’ of a young recruit,” which UBS sought to hire. He nonetheless applied in 2016 for an analyst position in the wirehouse’s Century City, Los Angeles office. In his lawsuit, Farkas describes himself as “born into a privileged society of high net worth families whose wealth and legacies are visible in academic institutions, charitable and art foundations, and retail brands throughout the world.”
In his lawsuit, Farkas argues his “personal connections to high and ultra-high net worth families made him a unique potential asset to UBS Private Wealth Management, where the price of client admission is a net worth of more than $25 million.”
One UBS senior vice president for the wealth management unit noted Farkas’ background and encouraged him to join the firm as an FA. The senior vice president “convinced Mr. Farkas to work in his private wealth management team,” the lawsuit states. Farkas alleges he was told that if he raised $20 million in new client money and passed a background check, he could have a job. His initial salary would be $70,000 but he would receive 25% of the gross management fees for each new client, Farkas’ lawsuit alleges.
On the basis of that offer, Farkas worked to bring in $22 million initially to UBS’ private wealth management unit and another $75 million for cash management, the lawsuit alleges. He was not compensated for his efforts to attract those assets nor reimbursed for the travel expenses he incurred while pursuing them, Farkas’ lawsuit alleges.
Farkas’ lawyer, Alyssa Schabloski of Gladius Law in Los Angeles, declines to provide any further detail about Farkas’ social and family connections, noting she and her client do not want to violate others’ privacy.
Schabloski’s only public comment about her client’s lawsuit: "Even with 97,000,000 reasons to employ Mr. Farkas, UBS fraudulently and unfairly took advantage of Mr. Farkas’ free labor to enrich its own coffers. We look forward to presenting our case to a jury to hold UBS accountable for its false promises and discrimination."
Throughout Farkas’ application process, one UBS managing director remained “less than enthusiastic” about Farkas’ prospective hiring, expressed “ageist sentiments” and also displayed “immediate animus during their first meeting,” according to Farkas’ lawsuit.
That managing director told Farkas among other things, the lawsuit alleges:
“You’re in your 50's; you don’t fit the mold.”
“It’s a younger man’s game.”
“A lot of guys your age come in and say I have guys at my golf club who will give me money.”
That managing partner also reset the bar from $20 million to $100 million as the amount Farkas had to draw in new client assets to UBS to be considered for a formal offer as an FA, the lawsuit alleges.
Then, when it appeared Farkas “would actually meet that goal,” the managing partner used “a bogus aptitude test and made up other excuses as pretext for refusing to hire Mr. Farkas and refusing to compensate him for the substantial work he did for UBS,” according to the lawsuit.
The test was an exam expected to measure his aptitude and ability to pass the Finra-administered Series 7 exam, even though Farkas had previously obtained his Series 7 license earlier in his career, according to the lawsuit.
After he failed the aptitude test, UBS managers told Farkas instead of an FA job, they would allow him to receive referral fees through a platform for outside “trusted advisors.”
During his ultimately thwarted recruitment to UBS, Farkas also told UBS management about a tax lien issue he faced and was told that “would not be a problem,” his lawsuit alleges.
According to BrokerCheck, Farkas told the SEC he'd reached a compromise with the IRS to pay $12,000 to settle an alleged $340,000 liability in 2018.
In its answer, UBS generally denies “each and every allegation” in Farkas’ complaint and specifically that it discriminated against him on the basis of his age. But also states affirmatively that Farkas should be arbitrating any claims and he has failed to exhaust administrative remedies. It also believes the firm’s and its individual managers’ conducts fall under “proper managerial discretion in good faith” and therefore were lawful.
A UBS spokesperson did not return a request for further comment.