“Holy crap!” That’s how Craig Price, a UBS AG senior vice president, told securities regulators he reacted when he saw the $2,600 tab for a client-development dinner he attended at an upscale Palm Beach, Florida, restaurant. It wasn’t the size of the bill that stunned him. It was who paid for it -- an ailing, 90-year-old UBS client.
The client wasn’t even at the dinner, but the broker who managed her trust was. So was the broker’s girlfriend, a longtime confidant of the client who had power of attorney over the trust. The trust paid the bill.
Price dug deeper. He says he ultimately discovered bigger charges to the trust: a Bentley in the girlfriend’s name, a trip to Toronto on a private jet and an attempted fund transfer to buy a penthouse apartment in the girlfriend’s name.
Price alerted his superiors, setting off a chain of events that would become tabloid fodder. The broker, Dennis Melchior, was quickly fired for what UBS said was a failure to disclose conflicts of interest in an unidentified trust. The broker’s girlfriend, Nancy Tsai -- a fixture of the Palm Beach charity scene and an ex-wife of celebrity fund manager Gerald Tsai -- was arrested and charged with grand theft and exploiting an elderly person, her mugshot published far and wide.
As quickly as that 2014 scandal erupted, it faded from public view. The UBS client died a day after Tsai’s arrest. Florida prosecutors dropped the case after concluding that they “cannot overcome every reasonable hypothesis of innocence and cannot prove the charges against Tsai beyond a reasonable doubt,” the state attorney said.
A second chapter has been playing out quietly ever since. UBS fired Price last year, claiming he had traded on nonpublic information. Price, in court filings, says that’s a lie and that he was dismissed for speaking up about the trust account and for raising questions about the Swiss bank’s willingness to police its own. Price has cast himself as a protected whistle-blower, filing claims with the U.S. Securities and Exchange Commission and in federal court, where he’s seeking two years’ pay plus damages and legal fees.
However Price’s legal battle with UBS is decided, it has exposed potentially deeper conflicts of interest over the trust than the bank has acknowledged publicly. Court filings, depositions, police and prosecutor reports, broker journal entries and internal bank records depict the couple as using trust assets to cover personal expenses and fatten Melchior’s book of business.
The broker’s case also offers a rare look at a type of dispute that’s typically handled privately in arbitration. The details speak to a fear among exiting brokers that banks may sully their records to impeach their credibility, justify a dismissal or retain clients.
Wealth Unit
Price, a 16-year UBS veteran who’d run the eponymous Price Wealth Management unit, says the bank had to know about the couple’s relationship and control of the trust. “The focus so far has been on Tsai and not on Dennis or UBS’s failure to supervise him,” he said in an interview.