UBS Sends California Broker Packing Despite His Big Numbers
UBS has fired a top-producing California broker, just four months after his former partner resigned amid an internal investigation, according to sources inside and outside the firm.
David S. James, a 30-year industry veteran, was terminated for business practices that persistently drew compliance scrutiny, according to former and current employees who spoke on condition of anonymity.
James has been ranked five times as one of Barron’s “Top 1200 Advisors” and was among its Top California brokers this year with $825 million in assets. He was a member of the Pinnacle Council, according to his LinkedIn profile, a subset of UBS’s top Chairman’s Council recognition club. Pinnacle membership requires minimum production of $3.75 million and includes a few dozen advisors, according to a source at the company.
Brokerage firms have long given a pass to top brokers for indiscretions ranging from blatant churning to more benign violations such as failure to report tax liens. Heightened regulatory scrutiny and imposition of heavier failure-to-supervise penalties, however, has been moderating such tolerance.
James, who joined UBS’s Century City, CA, office, from Oppenheimer & Co. in 2011, said he has been advised by his lawyer to refrain from commenting for the time being. His employment record with the Financial Industry Regulatory Authority’s Central Registration Depository had not been updated as of August 31 to reflect his termination.
James’ former partner, Michael J. Winn, who joined with him from Oppenheimer, voluntarily resigned from UBS in April “while under review for allegations that he violated firm policies,” according to Winn’s BrokerCheck record.
UBS had been reviewing Winn for failing to submit paperwork on a client’s replacement insurance policy, for selling an unapproved financial planning agreement, for accepting two gifts from the client worth more than $100 and for referring the client to outside banks for lending products, according to the Finra database.
Winn, who in April joined First Republic Bank’s Century City East private wealth office in Los Angeles as a managing director, denied all the allegations, according to his comments on the “separation.” He asserted that UBS told the client whose complaints apparently instigated the investigation that “there was no merit to the allegations about three hours after I resigned.”
It could not be determined whether the firm’s dissatisfaction with James tracks its investigation of Winn.
Winn did not return a call for comment left with his assistant at First Republic Securities.
The advisors jointly oversaw about $421 million of client assets and generated $6 million of fees and compensation when they left Oppenheimer almost eight years ago, according to published reports at the time.
A UBS spokesman did not return a request for comment. A receptionist answering the phone at James’ branch said that his sales assistant also has left the branch.
Big brokerage firms have taken steps in recent years to rid themselves of some estimable top producers. Morgan Stanley in May fired Ami Forte, one of its top women brokers, for failing to report tax liens and alleged violations of internal discretionary trading rules. The action quickly followed resolution of an arbitration battle brought by the estate of one of her clients that cost the firm $32.8 million.
Merrill Lynch tossed a Barron’s-honored team in western New York in late 2014 after discovering that its leaders were investing in undisclosed outside businesses along with clients and last year fired Tom Buck, a 34-year Merrill veteran and top Indiana broker, for unauthorized trading and placing customers in expensive commission accounts.
Firms have become less tolerant of infractions even by top brokers in recent years as regulators have focused on firm culture and said they are looking into whether high producers get a pass from compliance, said several lawyers who often represent brokers.
“In the last two years firms have begun to take a hair-trigger approach to terminating brokers for bad conduct,” said Andrew Stoltmann, a securities attorney in Chicago. “They are now letting brokers go for even minor transgressions and, certainly, for a series of minor transgressions.”
Stoltmann said he was unfamiliar with allegations regarding James.