Court rules in favour of UBS in UK wealth case
UBS has won the first battle in a legal dispute against Vestra, the start-up wealth manager headed by the Swiss bank's former top private banker in the UK, David Scott, and four of its senior employees.
The High Court judge has this morning ruled that UBS should be entitled to a springboard injunction on the grounds that Vestra deliberately solicited clients and staff away from UBS, and that senior ex-UBS staff breached their duty of fidelity.
A springboard injunction is a ruling against former employees suspected of trying to get an unfair start when launching a new business. As part of the injunctive relief, the defendant is no longer allowed to take on UBS clients or staff until the trial, which begins on October 2.
The four senior advisers accused of failing their duties at UBS are Duncan Carmichael-Jack, David Guild, Neil Pedley and Paul Pollard. Their gardening leave is due to expire on August 11. They were planning to join Vestra after that date, although it is not yet known whether they will move as planned. In the eyes of the law, the more senior the employee, the greater the duty of loyalty to his or her firm.
The injunction means Vestra employees, 52 of which resigned en masse from UBS two months ago joined by a further 23 more recently, according to the court hearings, will be prevented from poaching UBS clients from the private banking arm of the Swiss lender.
The judge, Mr Justice Openshaw, said: "I am firmly of the view that the claimants have put forward a formidable case that there was an unlawful plan to poach staff and clients from UBS." He added: "It is in my judgement an unlawful conspiracy dressed up as lawful competition."
Vestra also lost their right to appeal.
A spokeswoman for UBS said: "As we have always maintained, this legal action, which the court today upheld pending trial in October, was to ensure that certain senior departing employees abided by the contractual obligations that they agreed to when they joined UBS and to defend UBS’s legitimate business interests."
On Friday, Vestra defendants argued that as a start-up, restrictions put on their business could severely damage it. They alleged that UBS wants to block legitimate competition.
In a collection of forty emails seen by Financial News, former UBS employees gave Vestra's lawyers various reasons for their departure and said they were not coerced into joining by senior management. Technology, management and bureaucracy were concerns about UBS that were repeatedly raised by former advisers joining Vestra.
However Openshaw said he believed there was "a party line" which ran as a common thread through the emails, which employees may have been encouraged to use.
A spokesman for Vestra said: "Everyone at the company is both surprised and disappointed that the Judge has disregarded the written evidence of 40 people to grant this interim decision, which, if the judgement is right, has the impact of making it extremely difficult for any co-workers to plan to leave their employer together."
He added: "This interim view will be fully challenged at trial when the evidence is considered in full for the first time. This judgement does not prevent Vestra Wealth from offering a personal and independent service. It only affects certain specific categories of UBS UK Ltd’s clients until the conclusion of the trial."
The judge added it was "inherently unlikely that nearly the whole department would leave UBS en masse without extensive discussions between staff beforehand." He believed instead that departments within UBS were "seething" with plots and plans for many months. These were "obvious breaches of the loyalty and fidelity" owed to UBS.
The trial was supposed to conclude on Friday, but the judge said he adjourned judgement to have time to reflect over the weekend.
-- Write to Tara Loader Wilkinson at twilkinson@efinancialnews.com
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