UBS must face ex-bond strategist’s whistleblower lawsuit

Switzerland's national flag flies under the logo of Swiss bank UBS in Zurich

By Jonathan Stempel

NEW YORK (Reuters) – A U.S. judge has ordered UBS Group AG to face a lawsuit by a former bond strategist who said he was fired in retaliation for refusing to publish misleading research reports and complaining about being pressured to do so.

In a decision made public on Tuesday night, U.S. District Judge Katherine Polk Failla in Manhattan said Trevor Murray could try to prove that whistleblowing was a factor in his February 2012 firing, and that UBS’ actions violated the Sarbanes-Oxley corporate governance law.

Murray claimed UBS officials pressured him to issue skewed, bullish research on commercial mortgage-backed securities in order to support the Swiss bank’s trading and underwriting operations.

“Plaintiff believed that efforts to pressure him into publishing biased and inaccurate, but ostensibly independent, reports” were illegal, and a reasonable jury could find that his resistance was a factor in his firing, Failla wrote.

The judge’s decision, which was released in redacted form, is dated March 31. Murray has sought back pay and other damages.

UBS spokeswoman Erica Chase said in an email: “While we are disappointed in this decision, we continue to believe that the claims have no merit and we will continue to vigorously defend the case.”

Robert Stulberg, a lawyer for Murray, said in an interview: “We are gratified that Mr. Murray can now seek a full and fair remedy from a jury for his unlawful discharge. We are confident that he will prevail at trial.”

In seeking to dismiss the lawsuit, UBS had said Murray’s termination was part of a cost-cutting drive that eliminated thousands of jobs, after the bank had reported lower-than-expected revenue and a $2 billion loss from unauthorized trading by “rogue trader” Kweku Adoboli.

Murray was fired fewer than nine months into his second stint at UBS.

He had worked for the bank from May 2007 to September 2009, when he was let go because of cost-cutting prompted by the global financial crisis, according to court papers.

The case is Murray v UBS Securities LLC et al, U.S. District Court, Southern District of New York, No. 14-00927.

(Editing by Jeffrey Benkoe, Bernard Orr)