A Finra panel has ordered UBS Financial Securities to pay an investor $1.1 million in a case where the investment firm was accused of mismanaging his account for more than five years.

The complaint accused the firm of breach of fiduciary duty, misrepresentation and non-disclosure, negligence and gross negligence, failure to supervise and breach of contract, according to the arbitration award. The arbitration hearing lasted six days, said the claimant’s attorney, Lance McCardle of the law firm Fishman Haygood in New Orleans, who added that while his client had requested damages of $1.278 million to $2.526 million, he was satisfied with the outcome.

UBS did not return a request for comment by press time.

“It was definitely a hard-fought ... hearing with lots of witnesses,” McCardle said. “But I was confident in our position.”

According to the initial filing in the case, Patrick David Ridgeway opened several discretionary accounts with the Memphis, Tenn., office of UBS at the end of 2014 following the sale of his business for $13.5 million. When he told his advisor that he needed about $6 million in cash to settle some personal issues, taxes, and litigation and related expenses associated with the sale of his company, the advisor advised him to use a securities-backed credit line to pay those expenses rather than a portion of the sale proceeds, the claim said.

“The arrangement, of course, allowed … UBS to maximize their management fees by ensuring that [Ridgeway] leave all of his sales proceeds in UBS-managed accounts rather than use those funds toward his cash needs,” the filing said. “Through this arrangement…UBS received fees from the management of [the] invested funds, as well as fees on the balance of [the] outstanding loan.”

In addition, the filing said, the value of Ridgeway’s securities dropped in February and March 2020 during the initial weeks of the Covid-19 pandemic, resulting in a shift in the balance between his equities holding and his loan as percentages of his portfolio. At that point, UBS liquidated all of Ridgeway’s securities and moved the proceeds to cash, locking in those losses, the complaint said.

The loan stayed in place until the fall of 2020, when Ridgeway’s advisor left UBS for another firm, prompting Ridgeway to step away from UBS and engage a different financial advisor altogether, the filing said. After paying off the line of credit, Ridgeway had just $1.25 million to transfer to the new advisor, the filing claimed.

“When that advisor looked at the accounts, red flags went up immediately,” McCardle said. “He underperformed for five years. What was really egregious was when Covid came and the market dipped, they said he had to sell all his securities. They put his money in cash and then invested in a managed bond fund. And continued to charge him interest on the securities loan.”