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Murray v. UBS Securities, LLC

United States District Court, S.D. New York

February 24, 2015




On February 13, 2014, Plaintiff Trevor Murray filed this action against Defendants UBS Securities, LLC ("UBS Securities"), and UBS AG ("UBS") (collectively, "Defendants") under 18 U.S.C. § 1514A(a), the anti-retaliation provision of the Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 745 ("Sarbanes-Oxley"), and 12 U.S.C. § 5567(a), the anti-retaliation provision of Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 123 Stat. 1376 ("Dodd-Frank"), commonly known as the Consumer Financial Protection Act (the "CFPA"). Plaintiff alleges that Defendants violated the anti-retaliation provisions of both statutes in terminating his employment after Plaintiff made certain protected statements. Defendants have moved to dismiss both claims for impermissible claim-splitting, based upon a prior action filed in this Court alleging retaliation under Dodd-Frank; in the alternative, to dismiss the CFPA claims for failure to state a claim; and to stay any remaining portion of the action due to pending arbitration on the Dodd-Frank claim. For the reasons set forth in this Opinion, Defendants' motion to dismiss is granted, but only with regard to the CFPA claim, and their request to stay the remaining Sarbanes-Oxley claim is denied.


A. Factual Background

1. Plaintiff's Employment with UBS Securities

Plaintiff was first employed by UBS Securities, a broker-dealer registered with the United States Securities and Exchange Commission (the "SEC"), from approximately May 2007 to September 2009, at which time Plaintiff was laid off. (Am. Compl. ¶ 10).[2] Thereafter, in early 2011, UBS Securities solicited Plaintiff to return to work for the company. ( Id. at ¶ 13). In or around May 2011, Plaintiff rejoined UBS Securities as a Senior Commercial Mortgage-Backed Security ("CMBS") Strategist and Executive Director. ( Id. at ¶ 14). In that position, Plaintiff performed research and created reports "that were distributed to Defendants' current and potential clients about CMBS products, services and transactions, including, without limitation, CMBS products, services and transactions regulated by the [SEC] and/or the [Consumer Financial Protection Bureau (the CFPB')], and CMBS products in which UBS Securities held trading positions." ( Id. at ¶ 2).

2. Plaintiff's Agreements to Arbitrate with Defendants

As discussed in the Court's Opinion and Order of January 27, 2014, in the related action, when Plaintiff rejoined UBS Securities he signed a formal offer letter and a U-4 form, both of which obligated him to arbitrate any disputes arising out of his employment except where prohibited by applicable law. See Murray v. UBS Sec., LLC, No. 12 Civ. 5914 (KPF), 2014 WL 285093, at *1-2 (S.D.N.Y. Jan. 27, 2014) (" Murray I "). As the Court determined in that Opinion, the anti-arbitration clause of Sarbanes-Oxley's anti-retaliation provision did not cover the Dodd-Frank claim at issue there. Id. at *7-11. The Court did not discuss 12 U.S.C. § 5567(d)(2), which provides: "Except as provided under paragraph (3) [concerning collective bargaining agreements], and notwithstanding any other provision of law, no predispute arbitration agreement shall be valid or enforceable to the extent that it requires arbitration of a dispute arising under [the CFPA's anti-retaliation provision]."

3. The Termination of Plaintiff's Employment

According to Plaintiff, during his second stint with UBS Securities, senior personnel involved in CMBS trading and commercial mortgage origination made a "concerted effort" to influence Plaintiff "to skew his research to appear more favorable to UBS Securities' CMBS products and trading positions." (Am. Compl. ¶ 2). Plaintiff details a series of interactions with individuals responsible for CMBS trading, during which those individuals instructed Plaintiff "to help improve conditions in the CMBS market'"; "to inform the head CMBS trader about his research ideas prior to publication"; "not to publish anything negative" about certain bonds recently purchased by the trading desk; and "not to publish anything negative about the hotel sector because of UBS Securities' exposure." ( Id. at ¶¶ 18-20). Plaintiff "believed that he was being pressured to produce ostensibly objective research reports about its securities products that were... false or misleading, and intended to favor UBS Securities' products and trading positions." ( Id. at ¶ 23). He further claimed that he felt pressure to produce "reports about consumer financial products or services that were intended to be unfair, deceptive and/or abusive, to participate in offering or providing to consumers financial products or services that did not conform with Federal consumer financial law, and/or to engage... in acts that violated Federal consumer financial law." ( Id. at ¶ 24).

According to Plaintiff, despite this pressure "he did not publish any report that was inconsistent with his own research" (Am. Compl. ¶ 20), and he "repeatedly told his superiors at UBS Securities" about these encounters ( id. at ¶ 22). Specifically, from in or around December 2011 to January 2012, Plaintiff told his manager about the negative responses he had received to his research, including criticisms that Plaintiff's published articles were "too bearish' and off message' with the strategy of the trading desk and overall commercial mortgage group." ( Id. ). Plaintiff also alleged that in or around January 2012, he informed a Managing Director of UBS Securities that the head of CMBS trading and commercial mortgage originations had excluded him from meetings and "only interacted with Plaintiff to criticize his research and attempt to manipulate his reports." ( Id. ).

On February 6, 2012, UBS Securities advised Plaintiff that he was being terminated. (Am. Compl. ¶ 27). In the Amended Complaint, Plaintiff notes his "impeccable record, " and claims that his termination was motivated, at least in part, by Plaintiff informing his superiors about the attempts by others at UBS Securities to skew Plaintiff's published research. ( Id. at ¶¶ 29, 33, 40). Plaintiff claims that his termination thus violated the anti-retaliation provisions of Sarbanes-Oxley and the CFPA.

B. Procedural Background

On August 2, 2012, Plaintiff filed suit in the Southern District of New York alleging termination in violation of Dodd-Frank, and on the same day filed complaints with the United States Department of Labor (the "DoL") alleging termination in violation of Sarbanes-Oxley and the CFPA. The latter statutes' anti-retaliation provisions require that complaints first be filed with the Secretary of Labor, but allow complainants to file actions in federal court if no decision has been rendered by the DoL within, respectively, 180 and 210 days. See 18 U.S.C. § 1514A(b) (Sarbanes-Oxley); 12 U.S.C. § 5567(4) (CFPA). Plaintiff suggested that he would seek leave to amend his Dodd-Frank complaint by adding to it his Sarbanes-Oxley and CFPA claims once the ...

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