NBA legend Jerry West, Dodgers third-baseman Nomar Garciaparra and a bevy of other major sports figures have accused their prominent Los Angeles investment advisor of gouging them out of more than $3 million in excessive commissions on bond trades.
Gary R. Fournier, who has handled investments for scores of sports stars and celebrities, allegedly misrepresented his commissions and "churned" accounts to generate unnecessary trades and exorbitant fees, according to a claim filed with securities regulators.
In papers filed with the Financial Industry Regulatory Authority, West and the others seek unspecified damages from Fournier's former employer, UBS Financial Services Inc.
The claim is similar to a civil lawsuit and will be resolved through binding arbitration proceedings slated for July. It does not name Fournier as a party to the case, although the allegations focus on his actions.
Fournier, who has denied wrongdoing, declined to comment.
"All I can tell you is I am confident he is going to be fully exonerated after this gets heard," his lawyer, Michael Blumenfeld, said.
UBS contends the allegations are baseless. "We disagree with the clients' statement of claim, and we intend to defend ourselves vigorously in this matter," UBS spokeswoman Karina Byrne said.
Fournier, who moved from UBS to Bear Stearns Cos. in September 2006, is a financial advisor with more than 30 years of experience.
Those who now say they were defrauded include West, the Los Angeles Lakers' "Mr. Clutch" as a player and later a top executive, and General Manager Mitch Kupchak. Others include current and former National Basketball Assn. players B.J. Armstrong, Brent Barry, Stacey Augmon and Jeffrey West as well as former Major League Baseball players Sean Douglass, Mark Langston, Thomas P. O'Malley and Rex "Wonder Dog" Hudler, who is now a color commentator for the Angels.
High-powered sports agent Arn Tellem and his wife, Nancy Tellem, president of CBS Paramount Network Television Entertainment Group, are also among the claimants. Most declined to comment through their lawyer, Steven M. Goldberg, or did not return phone messages. Others could not be reached.
Most of those making claims were clients of Arn Tellem, Goldberg said. Tellem had invested with Fournier since 1991, when the broker was with Kidder Peabody & Co., according to papers filed by UBS.
The allegedly excessive commissions and churning of accounts involve $300 million in trades Fournier executed for Tellem and the others while he was with UBS from 2002 to 2006, according to the claim.
It contends that Fournier told clients that UBS would take no more than a 0.5% commission on bond trades but routinely charged more than that and then did not disclose the amounts to his clients.
Actual commissions were as high as 2.5%, Goldberg said. His clients did not know they were being overcharged because unlike statements for stock trades, those for bond trades don't reflect commissions, he said.
Fournier also churned his clients' accounts by engaging in "excessive and unnecessary trades . . . for the improper purpose of generating extra and exorbitant commissions for the benefit of UBS, as well as himself," the claim alleges.
The churning involved "a revolving door" scheme in which Fournier sold bonds to one client, then liquidated them and resold them to another client, and so on, collecting commissions on the transactions, the claim states.
"If you're telling Jerry West, 'This bond I bought you four months ago isn't good and we need to get rid of it,' why would you then sell it to somebody else?" Goldberg said.
UBS said the allegations were "without merit, both legally and factually" and said the claimants "have offered no evidence or specifics."
Goldberg said the alleged wrongdoing came to light in 2006, when Fournier announced plans to move from UBS to Bear Stearns and take his accounts with him.
Another UBS broker who was assigned to review the accounts discovered the alleged improprieties, Goldberg said. That broker allegedly told Tellem that he was being charged too much for commissions and that, if he would keep his account at UBS, he'd get a more favorable rate.
In a January 2007 letter to Tellem, several months before the claim was filed, Fournier expressed concern that the dispute could become "a long and possibly very public process."
"Over the course of my 30-plus-year career I have had but one complaint," he wrote in the letter, later submitted as an exhibit by the claimants. "UBS would love to try and tarnish this record in an effort to win back some of my clients."
UBS declined to comment on Fournier's assertion.
Tellem, West and the others filed their claim last June. The case is to be heard in July by a three-member panel of arbitrators selected by the Financial Industry Regulatory Authority, a self-policing body that licenses and regulates brokers.
UBS, in its answer, and Fournier, in his letter to Tellem, contended that the frequent trades were legitimate. They said many were the result of so-called bond swaps designed to generate paper losses to offset capital gains. Both UBS' filing and Fournier's letter contend he never told his clients that fees would not exceed 0.5%.
UBS' filing also portrayed Fournier as a sophisticated financial advisor who provides "white-glove service."
"Many of these clients are high-net-worth professionals who have stables of lawyers, accountants, tax advisors and business managers watching out for their interests," UBS said.
Times researcher Scott Wilson contributed to this report.