UBS AG (UBSN) was ordered to face a whistle-blower lawsuit by a former commercial mortgage-backed securities strategist who said he was fired for telling supervisors he was being pressured to publish misleading reports.
U.S. District Judge Jesse Furman in Manhattan rejected the Swiss bank’s request for dismissal of the case, saying in a decision filed yesterday that the former strategist, Trevor Murray, met requirements for proceeding under federal law.
Murray, who was responsible for research and reports about CMBS products distributed to UBS clients, said he was pressured to skew his published research in ways designed to support UBS Securities’ CMBS trading and loan origination activities.
Murray sued under whistle-blower protections in the Dodd-Frank Wall Street Reform and Consumer Protection Act. He accused UBS of illegally firing him partly because of disclosures protected by the 2002 Sarbanes-Oxley investor-protection law.
“The decision represents a definitive rebuke to the concerted efforts by regulated firms to dismantle the broad protections for whistle-blowers that Congress provided in in Dodd-Frank,” Murray’s attorney, Robert B. Stulberg, said in an e-mail. “The ruling is also notable for its holding that the SEC’s interpretations of the law’s whistle-blower protections are entitled to judicial deference.”
UBS said the suit should be dismissed because Murray didn’t report the allegations to the U.S. Securities and Exchange Commission and thus wasn’t legally defined as a whistle-blower.
Karina Byrne, a spokeswoman for Zurich-based UBS, declined in an e-mail to comment on the decision.
The judge wrote that the SEC has interpreted the Dodd-Frank act as saying protections “extend to those who make disclosures that are protected under the Sarbanes-Oxley Act, whether or not the disclosures were made to the SEC itself.”
The decision “shields conscientious employees, like Mr. Murray, from retaliation for alerting their supervisors to conduct that they reasonably believe violates the law,” Stulberg said.
The case is Murray v. UBS Securities LLC, 12-cv-05914, U.S. District Court, Southern District of New York (Manhattan).