The Appellate Court of Illinois has confirmed that UBS Financial Services owes a terminated investment manager more than $11 million in damages and fees after defaming him in the “Reason for Termination” section of Finra’s Uniform Termination Notice, the court’s decision said.

According to the Appellate Court’s decision last week, Mark Munizzi, a registered broker and investment advisor, was hired by UBS in 2003 and in 2016 was promoted to supervisory officer overseeing the securities brokerage managers in UBS’s Chicago offices. As part of his case, Munizzi asserted that in the 36 years he worked in the securities industry he never failed a regulatory or internal audit or received a write-up or warning of any kind, and UBS had given him exemplary annual assessments, the decision said.

In February 2018, two UBS accounts suffered unsecured losses of $700,000 and $800,000, which were exacerbated the next trading day when the market dropped 1,000 points and those losses grew to more than $3 million, the decision said.

After an investigation, UBS fired Munizzi in April 2018 and, as required, submitted the Uniform Termination Notice to the Financial Industry Regulatory Authority. On the form, UBS wrote that Munizzi was terminated because he had “failed to adequately supervise employees in association with the risks of an uncovered options strategy” and “gave varied responses during the review,” the appellate decision said, later confirming that those statements had been found to be false.

Munizzi then filed a complaint with Finra, alleging defamation, since the summary of the Uniform Termination Notice appeared in the BrokerCheck database, which is widely used for employers to vet job applicants, the decision said. Munizzi claimed that his ability to find a job had been severely impaired by this, the court said, and he sought modification of the termination notice, compensatory and punitive damages, attorney fees and interest.

After a 13-day arbitration hearing, a three-member panel of the Finra Office of Dispute Resolution found UBS’s statements were false, and that the firm was liable for more than $3 million in compensatory damages, plus interest on the portion that represented Munizzi’s severance pay; $7.5 million in punitive damages; and almost $500,000 in attorney’s fees and $25,000 in costs, the appellate court said in the decision. The award also directed UBS to change the reason for termination to “other,” and the explanation to “terminated without cause.”

Following the arbitration, Munizzi filed a motion to confirm the award in the circuit court, but UBS filed a motion to vacate or modify the award. Upon review, the circuit court upheld the award. 

UBS then took the case to the Appellate Court, arguing that the award should be vacated as “against public policy and because the circuit court erred in concluding that the arbitration panel’s factual findings were binding.” The Appellate Court also confirmed the award, saying that it reflected that “the arbitration panel found that UBS made false statements about Mr. Munizzi. … There is no public policy favoring false or defamatory disclosures by employers.”  

An attorney representing UBS in this matter could not be reached by press time.