Former UBS Broker with Celebrity Client Ordered to Repay His “Loan”

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This article was originally published by AdvisorHub.com

Adding insult to a once high-flying broker’s injury, a Financial Industry Regulatory Authority arbitrator has ordered the barred former advisor to pay UBS the balance on his hiring-bonus “loan,” plus interest and UBS’s legal bill.

Kenneth Stewart Tyrrel, a Virginia-based ex-advisor who Finra ousted from the industry in December, owes UBS Financial Services $262,773 on his loan and $9,000 of costs and lawyer fees, according to an award decision published Tuesday that affirmed UBS’s claim of breach of promissory note and unjust enrichment.

Tyrrell, whose 23-year career as a broker also encompassed stints at Merrill Lynch and Wachovia/First Union Securities, was discharged from UBS in 2016 after seven years, amid allegations of undisclosed private securities transactions, outside business activities and compliance certifications.

Finra’s enforcement unit threw him out of the securities industry in December, citing violations involving 11 private securities transactions and his role as a business advisor to trusts and charities associated with a client. The client is believed to be major league pitching star Justin Verlander.

Tyrrell’s lawyer, Jeffrey Robertson of Schulte Roth & Zabel in Washington D.C., did not return a call for comment on the decision from the sole arbitrator.

For UBS and other large firms, recruiting loans amassed during a broker-hiring spree over much of the last decade remain a significant overhang on their balance sheets.

UBS Group AG’s U.S. wealth unit had $2.6 billion of such loans on its books at the end of 2017. Like other so-called wirehouses, UBS has significantly reduced its recruiting of veteran advisors in the last 18 months.

Tyrrell accepted Finra’s bar without admitting or denying its findings.

UBS had filed its arbitration claim against Tyrrell in August 2017, one year after it discharged him.

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