The U.S. wealth management arm of UBS is accusing some headhunters of playing dirty tricks. That’s as the business, UBS Wealth Management Americas (WMA), rides out the sensational trading scandal at the London offices of UBS, pushing forward with recruitment plans and gathering assets, people familiar with the firm told Registered Rep. Despite extensive media coverage describing nervous financial advisors and clients at the firm, insiders contend that much of this unflattering coverage is over-the-top. And it is partly fuelled, they charge, by headhunters for rivals seeking to destabilize UBS WMA.

Indeed, headhunters who work for UBS who were contacted for this story had, not surprisingly, a more positive outlook. Glenn Taylor, number one recruiter for UBS WMA last year by FAs signed, was taken aback by some news stories. “It’s simply not fair that a headhunter can go on the record without it being disclosed he or she works for the competition but does not work for UBS,” said Taylor, president of Taylor Steele & Associates Inc. in Cota de Caza, California. He said these same headhunters consequently took cheap shots, sending confused messages to clients and jittery FAs. “Of course, it is in their best interest to say whatever is best for their firm,” Taylor said. “That publicity has hurt. FAs don’t get to hear the other side, thinking some of these headhunters are industry experts without realizing they have an ulterior motive.”

Taylor is not alone. “I find it pretty frustrating sitting here as other recruiters are putting out a negative spin on UBS. That is not the reality today,” said UBS recruiter James Harmon, president of Renaissance Unlimited in Southampton, N.Y. Harmon says he has placed as many as 1,300 FAs with UBS WMA and its predecessor firm, PaineWebber since 1989. Harmon rarely talks to reporters but said he would make an exception. “They are trying to breath negative news and move advisors out of UBS,” said Harmon of headhunters who’ve told reporters that advisors at UBS WMA are at their wits’ end.

Of course, UBS has been here before. It has had a major tax-evasion scandal and other damaging press including from the sale of toxic assets. The latest scandal has triggered the sudden resignation of group chief executive Oswald Gruebel. It sparked new rumors that UBS WMA would be sold. UBS has vehemently denied, once again, it is for sale. Taylor contended his team of ten recruiters haven’t encountered much “pushback” lately lining up prospective recruits for UBS. “One of my team mentioned that there is pushback from maybe one in 150 prospects,” he said.

Meanwhile, managers at UBS WMA are said to be furious about news stories quoting some headhunters “trashing” their business. “It has really bothered people at UBS, especially when it is not clear who they work for,” said one UBS source. “The motivations of some of these headhunters are suspect and not honorable.” For example, one recruiter, Mindy Diamond, who does not recruit for UBS (but hires FAs away from UBS), told Registered Rep., last week her phone had been “ringing off the hook.” The calls were from UBS advisors – some, she said, on the fence thinking about leaving. [See Registered Rep., September 22, 2011, McCann Memo Seeks to Reassure Jittery UBS Brokers, http://registeredrep.com/institutions/ubs/mccann_memo_aims_to_reassure_jittery_ubs_brokers_09232011/index.html

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In an interview this week, Diamond, acknowledging she does not work for UBS. She stood tough behind her earlier comments. Diamond also dismissed suggestions they are a cheap shot. “I don’t think that at all,” she said. “I think the comments we make in the press are the direct result of what we are hearing directly from advisor population at UBS. We’re not making them up.”

All the same, Taylor is fighting back. In recent days, he has had to do “damage control” on at least five pending (and jittery) FA hires for UBS. His firm sets up “unfiltered conference calls” between the prospective hires and FAs he has previously placed at UBS. “That way, they get the complete story straight from the soldier’s on the ground,” Taylor said. “They are telling them there is no impact on their business at UBS from the scandal, actually it is doing just fine.” Taylor spoke to one FA he recruited for UBS with production of $800,000. He joined right after the scandal was reported. This advisor has since informed Taylor he’s pleased with his move.

UBS is also pleased about something else. Insiders at UBS said the scandal has overshadowed encouraging news lately at the Americas business. In two key markets, recruiting is up strongly, they say. There were 14 net new FA hires year-to-date in metro New York. That’s the result of 41 new FA hires and 27 terminations, insiders said. The Southwest market had 28 net new hires -- 40 new FAs less 12 who left. One official for UBS, speaking on background, said he could not disclose specific numbers but “the trajectory” at the Americas is strong. “The hiring numbers are up as is production,” he said. This same person said UBS Wealth Management Americas won a valuable mandate on the Friday after the trading scandal broke in London last month -- a $250 million account. Meanwhile, Swiss parent UBS AG said this week it will have a modest third quarter net profit. That despite the losses from the trading scandal and large restructuring charges.

Tom Boulund, an FA who officially joined UBS WMA with his partner Kelly Bramer, from Morgan Stanley last Friday, has no regrets. Still, he did not underestimate the fallout. The scandal has done no favors for the turnaround plans at the once embattled Wealth Management Americas overseen by CEO Bob McCann. “The loss of $2.3 billion from the scandal is a lot of money—it’s a huge number. Is there is concern? Absolutely,” said Bouland, a major producer based in Iowa, Davenport. Bouland and his partner have trailing 12-month production of some $1.3 million and assets under management slightly above $130 million.

Bouland thinks he made a smart career move: “When you put UBS in context with what happened two years ago with the trouble in mortgage-backed securities [at Morgan Stanley] it is not quite as meaningful,” he said. “When you put it in perspective it seems to be a onetime incident. Personally, I think UBS handled it in a very wise manner rather than wait for press to play it out for six months with a lot of innuendos.” Another seasoned FA at UBS WMA said the scandal hurt his client acquisition efforts. But he said the firm had proactively reached out to reassure the firm’s network of 6,860 or so FAs. UBS FAs in turn have had to reach out to anxious clients.

Bouland said clients are understanding. But it means educating them in the alleged antics of UBS rogue trader Kweku Adoboli. Adoboli was charged last month with fraud and fraudulent accounting for “unauthorized speculative trading” in equity index futures over a three-month period. The alleged scam occurred on the institutional side. However, Bouland said some clients on the wealth management side immediately assumed their money was at risk. Once they are reassured otherwise, clients rest easy, he said. He has already reached out to 50 clients. “I worked all day Friday and a lot of Saturday reaching out to them, and I am going to say the scandal was only brought up by one out of 50,” he said. His practice has 240 households. He is not overly worried about transitioning his Morgan Stanley business to UBS.

“I am guessing that when the firm [Morgan Stanley] tries to start retaining these customers, they will be brought up to speed [on the scandal]. But I don’t think that is going to be a good thing because they have their own issues,” added Bouland, citing Morgan Stanley’s exposure to credit default swaps. Morgan Stanley’s stock dipped last week as the cost of buying CDS jumped on fears the bank is at risk because of its exposure to French banks.

Bouland said he could have reversed his decision to join UBS. After being reassured by management his business would not be hurt, he moved forward. “If I had thought that there were far-reaching and long-term [negative] consequences, I wasn’t going to move,” he said. “I am extremely happy about the move. To be honest, there are enough what-ifs to go around at the other firms. What if Merrill Lynch is spun off by Bank of America? What if Morgan Stanley is unable to complete the purchase of Smith Barney.”

Diamond is unapologetic. “We are very careful not to make gratuitous comments,” she said, referring to her recent UBS comments. “We are very careful not to make gratuitous comments and not to take gratuitous potshots and not every to be a spin doctor at all.”