UBS Complaint Against Jeffries, Lorello and Kelly

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FINANCIAL INDUSTRY REGULATORY AUTHORITYDISPUTE RESOLUTION- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - xIn the Matter of the Arbitration of a Certain ControversyBetween:UBS SECURITIES LLC,Claimant,- against -JEFFERIES & COMPANY, INC.,BENJAMIN D. LORELLO, and SAGE KELLY,Respondents.::::::::::::- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x FINRA No.: 09-

STATEMENT OF CLAIM

Claimant UBS Securities LLC (with its affiliates, collectively referred to as “UBS” or the“Firm”), by its attorneys Epstein Becker & Green, P.C, respectfully submits this Statement of Claim to arbitration before the Financial Industry Regulatory Authority (“FINRA”) DisputeResolution, and states as follows with respect to the conduct of Respondents Jefferies &Company, Inc. (“Jefferies”), Benjamin D. Lorello, and Sage Kelly.

PRELIMINARY STATEMENT

1.

This arbitration arises out of Respondents’ unlawful raid of UBS’ lucrative GlobalHealthcare Investment Banking Group (the “Healthcare Group”) and beyond, which resulted inthe mass resignation and departure of at least 36 UBS employees between June 17 and June 21,2009 and a nearly complete lift-out of UBS’ Healthcare Group. Jefferies’ massive, premeditatedraid was made possible through the active conspiratorial assistance of Respondents BenjaminLorello and Sage Kelly -- two senior UBS Managing Directors who were entrusted by UBS torun the Healthcare Group. Since at least March 2009, Lorello and Kelly have betrayed theirfiduciary, common law and contractual obligations to UBS by surreptitiously planning

inter se

and with Jefferies to orchestrate this raid and essentially transport the Healthcare Group among

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others to UBS’ competitor Jefferies, where Lorello will become the Global Head of InvestmentBanking inclusive of Healthcare which will be headed by Kelly. On June 17, 2009, Lorello andKelly abruptly resigned from UBS to join Jefferies. Since then, under the influence andguidance of Lorello and Kelly, Respondents coordinated the mass resignation of nearly the entireprofessional staff of UBS’ Healthcare Group and others in the United States and abroad.2.

Lorello’s and Kelly’s violations of their fiduciary obligations to UBS arecompounded by Respondents misappropriation of UBS’ confidential and proprietary businessinformation to, among other things, jump-start a competing Healthcare Group for Jefferies. Tothis end, Respondents used UBS’ confidential and proprietary information concerning employeecompensation and productivity to quickly and efficiently purloin dozens of critical UBSinvestment bankers, analysts, and others in the United States and elsewhere.3.

Respondents’ conduct has inflicted enormous reputational, economic and otherharm on UBS, which cannot be remedied by money damages alone. Respondents should beenjoined from continuing with such conduct in order to prevent UBS from continuing to sufferthis irreparable harm. The relief sought by Claimant includes a constructive trust -- a trustimposed by operation of law on Jefferies requiring it to hold the misappropriated business for thebeneficial ownership of UBS -- and ultimately to account and to pay UBS for the damages it hasand will incur, to the extent quantifiable.4.

UBS also seeks limited injunctive relief requiring Respondents Lorello and Kellyto honor their continuing obligations to UBS, which includes their compliance with applicablenotice periods before they can commence employment with Jefferies, their duty to refrain fromusing or disclosing UBS’s confidential and proprietary information, and their contractualcommitment to refrain, for a period of ninety (90) days after their notice of resignation, from

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directly or indirectly soliciting, influencing, inducing, employing or engaging, any employee orclient of UBS. With regard to Jefferies, UBS seeks corresponding limited injunctive relief enjoining Jefferies from directly or indirectly inducing any UBS employee or former employeeto breach his or her fiduciary obligations, using UBS’ confidential or proprietary businessinformation, soliciting even additional employees of UBS’ Global Healthcare Group or othersand soliciting or servicing UBS Healthcare Group or other clients that were not already Jefferiesclients.

THE PARTIESI.

Claimant - UBS

5.

Claimant UBS is a limited liability company organized under the laws of the Stateof Delaware. UBS has its principal office at 677 Washington Boulevard, Stamford, Connecticut06901, and operates an office at 299 Park Avenue, New York, New York 10171.6.

UBS is a direct and indirect subsidiary of UBS AG. UBS is a broker-dealer andinvestment bank, and a registered member of FINRA.

II.

Respondents

7.

Respondent Jefferies is a corporation organized under the laws of the State of Delaware. Jefferies has its principal office at 520 Madison Avenue, New York, New York 10022.8.

Jefferies is a broker-dealer and investment bank, and a registered member of FINRA.9.

Respondent Benjamin Lorello is a Managing Director, Head of UBS’ HealthcareGroup, and Vice Chairman of UBS’ Investment Banking Department (“IBD”). Lorello alsoserved on the IBD Americas Executive Committee, which the IBD’s senior most group in the