UBS Ex-Strategist Claims Retaliation and Seeks DamagesBy and
Trevor Murray says he was pressured to alter his research
Rare whistle-blower case citing Sarbanes-Oxley gets under way
A former UBS Group AG strategist told a New York jury that the Swiss bank deprived him of millions of dollars in pay and pushed him into a long-lasting depression by firing him five years ago after he blew the whistle on efforts to influence his published research.
Trevor Murray, a former senior strategist for commercial mortgage-backed securities, sued the bank in August 2012, alleging he was fired that year after complaining to supervisors that he was being pressured to produce misleading reports that were favorable to the bank. He’s seeking back pay worth more than $3 million plus unspecified damages.
Murray, 46, accuses UBS of violating the whistle-blower protections enacted as part of the 2002 Sarbanes-Oxley Act. While it’s rare for companies to face such claims in court, a jury in the same Manhattan courthouse just last month found that a former JPMorgan Chase & Co. wealth manager had been fired illegally and awarded her $1.13 million in damages before a judge threw out the decision, calling it flawed.
In opening arguments in the trial on Murray’s claims on Wednesday, Robert Herbst, an attorney for Murray, told jurors that Murray hasn’t been able to find comparable work since moving to Charlotte, North Carolina.
In recent years, Murray has done some consulting work, as well as a sales job at Morgan Stanley for $75,000 a year, which was “not quite his cup of tea,” Herbst said. That job lasted only four months. Murray is currently earning an hourly wage at a grocery store and has suffered from depression, insomnia and a loss of libido and self-worth, the lawyer said.
“You’re going to hear from Mr. Murray what it’s like to live in his skin,” Herbst said.
UBS’s lawyer, Gabrielle Levin, told jurors in federal district court in Manhattan that Murray was never a whistle-blower and that his termination was part of a broader reduction in staffing caused by the bank’s poor financial performance at the time. She said there was a “shocking” lack of evidence backing his claim.
“Mr. Murray didn’t send a single text or email to anyone about what was happening to him at UBS,” Levin said in her opening statement. “He said he tried to get people’s attention, but he didn’t leave a trace.”
The bank also contends that Murray failed to use any of the bank’s internal resources for whistle-blowing.
“There was actually a long list of people Mr. Murray could have contacted if he wanted to blow the whistle,” Levin said. “That’s because UBS wants to know about this kind of conduct.”
According to his suit, Murray joined UBS in May 2007, working as a director in the mortgage securities and special assets groups until, he says, he was laid off in September 2009. He rejoined the company in May 2011 as a senior commercial strategist for mortgage-backed securities, starting at a base salary of $250,000.
As a strategist, Murray says he was responsible for providing independent research about UBS’s commercial mortgage-backed securities and writing reports that were distributed to current and potential clients. But shortly after he returned to the firm, he said, he started receiving pressure to position his research in support of the bank’s CMBS trading and loan-origination business.
Murray, in his suit, describes multiple attempts by his managers and colleagues to get him to write bullish assessments of commercial mortgage-backed securities and recast his opinions based on UBS’s own holdings.
Murray says that the former head of commercial real estate finance, Kenneth Cohen, who left the company in 2013 to lead commercial real estate at Bank of America Corp., in particular urged him to help “improve conditions in the CMBS market,” which he called a “significant revenue generator” for UBS’s investment bank.
In September 2011, Murray said, Cohen sat down next to him and told him that he disagreed with his research. He then asked Murray to run his ideas past the head CMBS traders before publication to maintain “consistency” and not confuse the market, Murray said.
Cohen and Bank of America representatives didn’t immediately respond to messages seeking comment on Murray’s suit.
Murray also said that around the same time, the bank’s head CMBS trader, David McNamara, and another trader, Jamarr Delauney, urged him not to publish his opinion that certain bonds recently purchased by the trading desk were overrated. A few months later, Cohen stopped him in the hallway and admonished him for publishing an article he had found “too bearish.”
Murray says he complained to superiors, including his manager, Mike Schumacher, and a managing director, Jeff Ho, about Cohen’s behavior. Neither responded, Murray said, and nobody took any steps to stop anyone from interfering with his work.
Even though he received another “spotless” performance review in January 2012, Murray says he was terminated the following month -- despite pleas from his immediate superiors to keep him given his “importance to the business and his stellar record.”
The bank had asked U.S. District Judge Katherine Polk Failla to dismiss the case, saying that Murray wasn’t technically a whistle-blower since he reported his concerns to company superiors and not the U.S. Securities and Exchange Commission. Failla declined the request in May 2013, saying that protections extend to those who report disclosures of violations of securities laws whether or not they are reported to the SEC.
UBS then moved to have the dispute heard in arbitration, a request that was granted in February 2014. Murray filed a new suit shortly afterward. In February 2015, Failla allowed that suit to proceed toward trial, while throwing out Murray’s claims under the Consumer Financial Protection Act, finding that the mortgage bonds at issue weren’t regulated by the Consumer Financial Protection Bureau.
In March, Failla again denied UBS’s bid to throw out the suit before trial, saying that Murray had presented enough evidence that would allow a reasonable jury to find that he was a protected whistle-blower whose reports to his superiors contributed to his termination.
The cases are Murray v. UBS Securities, 12-cv-5914 and 14-cv-00927, U.S. District Court, Southern District of New York (Manhattan).