Dana White revealed the news on Thursday night's edition of Olbermann when talking with Jeremy Schaap.
In his first fight is a welterweight, Palhares submitted Mike Pierce in just 31 seconds. However, he refused to let go of the heel hook for several seconds following the tap, despite cries of pain from his opponent and the insistence of the referee.
It was the only submission of the evening, but Palhares was denied his 'Submission of the Night' bonus because of what UFC officials declared to be "unsportsmanlike conduct." White had promised further discipline would be forthcoming.
Palhares received a 90 day suspension back in 2010 when he also refused to relinquish a heel hook well after his opponent, Thomas Drwal, had submitted. Additionally, he has behaved similarly in grappling tournaments outside of the UFC. He also tested positive in 2012 for elevated testosterone following a loss to Hector Lombard.
"This is the second incident we've had with Palhares where he had the lock and he didn't let it go. Finally he let it go, but I'm going to cut him." White said. "He's done."
During his time in the UFC Rousimar Palhares compiled and 8-4 record, with six of those victories coming by leglock. But it was his actions following those victories that garnered him the most attention. And much like Paul Daley and Babalu before him, the UFC has shown little tolerance for fighters who continue to fight after the final bell.