The mother of a UBS financial complex director who died in January wants to take the wirehouse to arbitration, claiming UBS steered assets she stood to inherit to her dead son’s girlfriend. Erich Frank, who was an advisor and complex director for the White Plains office, died after a 17-month battle with colon cancer.
Phyllis Frank, the mother, wants a Finra panel to hear her claims that during her son’s final weeks in hospice care, UBS employees interfered, redirecting money meant for her to her son’s live-in girlfriend.
The litigation flashes a warning sign for wirehouse employees: Just because family members use your assets while you’re alive doesn’t mean they have a right to them when you are gone.
"UBS harassed an employee of the firm on his deathbed to sign financial documents, estate planning documents, wills, and transfer forms purposefully intruding upon the peace and tranquility that ought to have accompanied Erich Frank’s final days. Instead, UBS robbed a man of his dignity and a family of their financial security without cause or reason," the mother’s federal petition alleges.
A UBS spokesman declined to comment on the litigation.
But UBS filed an answer to the mother’s previously-filed Finra complaint against it, which a Finra case specialist on Oct. 1 ruled as ineligible to be heard by one of its arbitration panels, triggering her federal lawsuit.
In that answer, UBS representatives characterized Frank’s mother’s allegations as: “Nothing could be farther from the truth.”
“I’m flabbergasted,” Adam Weinstein says about the Finra ruling to make his clients’ claims ineligible for a Finra hearing. Weinstein, a lawyer with New York’s Gana Weinstein, represents Phyllis Frank, the mother, and Jayne Tuchman, her daughter, who holds power of attorney. While often plaintiffs do not want to go up against large firms in front of Finra arbitration panels, in this case Weinstein thinks UBS’s strategy is to make his clients give up because lengthy litigation might become too cost-prohibitive for them to continue the fight.
The legal battle also stands as a cautionary tale for FAs by underscoring that they should themselves follow the advice they so often dispatch to clients: Update estate documents long before you reach hospice care.
According to Phyllis Frank’s new federal petition, her son died after battling colon cancer for 17 months. While he lay in hospice care during his last weeks, a UBS broker and UBS lawyer helped his live-in girlfriend transfer his assets and redraft his estate documents so she would inherit the bulk of his assets, the petition alleges.
At the time, Erich Frank, who had worked at UBS since 2004, was not competent to make such decisions, the petition alleges.
Phyllis Frank is a customer of UBS, based on her investment and financial dealings with her late son — and therefore has a right to arbitrate before Finra, the petition argues.
For the last 11 years of his life, Erich Frank paid his mother’s mortgage, medical bills, and other expenses, the petition states.
Phyllis Frank was listed as the beneficiary on all of his transfer on death documents tied to his accounts until he entered hospice care, the petition states. New York state law called for his mother to inherit all his assets because Erich Frank didn’t have a will — the circumstances until he entered hospice care — the petition states. In November 2017, after he had received his cancer diagnosis, Erich Frank selected his mother as the beneficiary of his UBS life insurance policy, the petition states.
Eleventh-hour changes to death documents
But after Erich Frank entered hospice care in December 2018, UBS employees helped his girlfriend, with whom he had lived for five years, put herself as the beneficiary for all his TOD accounts and his UBS life insurance policy., the petition alleges. Also at this time, Erich Frank signed a will that “virtually disinherited his mother,” the petition alleges.
Erich Frank’s newly-drafted will also assigned the role of executor of his estate to a UBS advisor, an assignment that called for the FA to receive compensation, according to the petition. Given that compensation, UBS and its FA should have complied with Finra rules which require reporting of any new outside business activities, the petition argues.
According to notes taken by the hospice staff, once he entered hospice care, Erich Frank was in “no position” to sign a will, as he was “nonverbal,” the petition states. In addition to switching the beneficiaries on his accounts, the petition alleges that only days before Erich Frank’s death the girlfriend and UBS employees arranged for her to receive a $40,000 line of credit based on his brokerage accounts, labeling that transaction as “stealing.”
In a letter to Finra on Sept. 12, a UBS representative argues against Finra allowing Phyllis Frank to arbitrate her claims before one of its panels.
“[T]here is no written agreement between [the mother] and UBS and, even by the broadest of definitions, [she] fails to qualify as a customer of UBS,” the letter states.
In a second follow-up letter on Sept. 23, the UBS representative argues that Phyllis Frank “misleadingly conflates a beneficiary of a retirement account with a beneficiary of a trust, or similar entity. A beneficiary of the latter is protected by certain fiduciary duties that do not exist in this matter. To hold otherwise would needlessly subject all firms to additional disclosure requirements that simply do not exist and certainly cannot be said to be in the spirit of Finra.”
In its Sept. 25 answer to Phyllis Frank’s Finra complaint, UBS addressed the substance of her allegations and offered an alternative chronology of what happened in the weeks before Frank’s death.
In December 2018, after Erich Frank learned from his doctor that “no further treatment would be successful,” he told a “personal friend and colleague” that he wanted his live-in girlfriend to be the “beneficiary for his life insurance and accounts that he had at UBS,” according to UBS’s answer.
“As any friend would do in a similar situation,” the colleague “complied” and “worked to set up a call between Mr. Frank and the UBS Benefits Express team,” the answer states.
The call took place on Dec. 20, 2018, and UBS’ head of benefits and a representative from its third-party vendor of 401(k) services were on it, the answer states. Erich Frank’s colleague and fellow FA only helped coordinate the call and did not otherwise participate in it, the answer states.
When Erich Frank drafted the new will, also on Dec. 20, only his lawyer and an associate were in the meeting, the answer states. They “made the independent determination that Mr. Frank was capable of executing a will,” the answer states. The UBS colleague of Frank’s who was named executive “did not become aware of this fact until after the passing of Mr. Frank,” the answer states.
Therefore, the UBS answer argues: “Any assertion that any individual from UBS had any input into the contents of Mr. Frank’s will is patently false and unsupported by the facts.”
“Regardless of whatever inter-family dynamic may be at play here, it is unmistakable that Mr. Frank was mentally competent to make the decisions that he made at the time that they were made,” the answer states.
UBS’s arguments may have tipped the balance for a Finra senior case officer. But not for Phyllis Frank, who plans to persist with the litigation, her lawyer says. She is — after all this — despondent. “She is an elderly woman who just lost her son,” Weinstein says.