UBS Financial Services posted a $13.3 million appeal bond in a legal battle to vacate a Finra award in favor of a former supervisor who claimed the wirehouse defamed him, court records show.

The wirehouse posted the bond on November 17. The bond covers a recent court judgement against UBS and a nearly $3,000-a-day accrual in potential interest obligations in the court fight.

Weeks before UBS posted the bond, Caroline Moreland, a judge on the Cook County Circuit Court in Illinois, confirmed a Finra arbitration award in favor of former UBS supervisor Mark Munizzi. The award was granted by a Finra arbitration panel on Dec. 11, 2019.

The judge ordered UBS to pay Munnizzi around $12.2 million to cover the $11.2 million Finra arbitration award, roughly $97,000 in lawyers’ fees and costs, and nearly $909,000 in interest from the date of the award up to her judgement.

Munizzi had worked as an operational supervisor for the wirehouse for 15 years before he was fired on Apr. 19, 2018, according to a brief he filed in an Illinois state court on February 11.

Following his discharge, UBS issued a U5 termination form for Munizzi that alleged he failed “to adequately supervise employees in association with the risks of an uncovered option strategy in employee and employee related accounts,” according to the brief.

But Munizzi’s brief states that had “no knowledge” of the risks, and resulting losses, that related to those accounts.

In his Finra complaint, Munizzi alleged that UBS defamed him, engaged in tortious interference with prospective economic advantage and violated state wage payment regulations, and owed him severance, according to an arbitration award document published by the self-regulator in December last year.

On Dec. 13, 2019, Munizzi asked the Illinois court to confirm the Finra arbitration award. In response, UBS filed its motion to vacate the award. In its brief, UBS argued that its U5 disclosures followed a public policy “favoring the protection of the investing public through the disclosure of information regarding negligent or dishonest securities professionals.”

A UBS spokesman declined to comment for this story.

Lawyer Steven Gomberg, who represents Munizzi, weighed in on LinkedIn about how U5s are used by some companies.

U5s “have been weaponized to punish, limit the ability of former employees to compete and to avoid severance obligations,” Gomberg, counsel at the Chicago law firm Lynch Thompson, posted two weeks ago.

“Financial institutions should no longer be afforded any privilege protection from published untrue and inaccurate statements made about former employees,” he added.

Munizzi became a registered representative in 1987 and worked at Merrill Lynch, Lehman Brothers, Smith Barney and Prudential Securities before joining UBS in 2003, according to his BrokerCheck profile.

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