UBS Sued for Closing Accounts of U.S. Citizens Living Abroad
A California woman residing in France has filed a putative class-action lawsuit against UBS’s U.S. broker-dealer alleging that its 2014 decision to close or freeze retirement and some other accounts of non-residents violated her fiduciary and contractual obligations.
In a complaint filed Friday in federal court in New York City, Kellie Delkeskamp said UBS Financial Services failed to meaningfully advise her and others in her position that it was closing, freezing or converting to cash their retirement and some other accounts, declining to provide ongoing investment advice, and keeping benefits of custodying the cash accounts, such as interest, for itself.
“Notwithstanding this dramatic change in the nature of the account that completely eliminated any investment benefit to Plaintiff, UBS failed to meaningfully notify Plaintiff of the change in status and/or that she would not be earning any investment returns from her account going forward,” the lawsuit alleges.
UBS did not disclose to Delkeskamp the consequences of the changes until she “affirmatively checked the status” of one of her accounts, the lawsuit said.
UBS is among many brokerage firms that in recent years severely limited servicing overseas accounts out of concern over complying with tightened anti-money-laundering laws and monitoring regulations. Merrill Lynch and Morgan Stanley, among others, have been hit with heavy fines, and they and others have closed or substantially raised account size requirements and oversight responsibilities.
A UBS spokesman declined to comment on the lawsuit.
Lawyers at Rigrodsky & Long, a Garden City, NY, law firm representing Delkeskamp, did not return a request for comment.
The class-action filing, which seeks unspecified statutory and punitive damages and attorneys’ fees and costs, alleges that potential class members should not be bound by statute of limitations going back to when the foreign-resident policies were initiated six years ago because the changes and their implications were “hidden and undisclosed.”
It also asserts that customer agreements requiring disputes to go to arbitration rather than court are unenforceable because the arbitration clauses are “substantively unconscionable” and were not meaningfully disclosed.
Advisors with clients living abroad have chafed over many of the new requirements firms have imposed, and some Merrill Lynch brokers in 2016 filed a class-action claiming the firm fraudulently misled them about its commitment to their overseas clients. The suit was subsequently withdrawn.