UBS Financial class action lawsuit overview:
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- Who: Plaintiff Andrew Davitt filed a class action lawsuit against UBS Financial Services Inc.
- Why: Davitt claims UBS breached its fiduciary duty to customers by shortchanging those enrolled in its cash sweep program.
- Where: The UBS Financial cash sweeps class action lawsuit was filed in New York federal court.
A new class action lawsuit alleges UBS Financial cash sweeps disproportionately benefit the bank instead of customers.ย
The UBS Financial class action lawsuit alleges the cash sweep program offers customers an interest-paying account to hold cash with Federal Deposit Insurance Corp. (FDIC) protection.
The UBS Financial cash sweeps program โsweepsโ uninvested cash from customer accounts into deposit accounts at a UBS-affiliated or third-party bank.
However, plaintiff Andrew Davitt alleges the UBS Financial cash sweeps program provides โoutsized benefitsโ for UBS and affiliates โat the expense of plaintiff and the proposed class.โ
UBS Financial class action says bank conceals benefits it receives from cash sweeps
Davitt claims that UBS selects the banks that participate in the cash sweep program, the types of accounts customersโ cash is swept into, the interest rates customers earn and the amount paid to UBS and affiliates from the program.
UBS purports to act as an agent for its customers yet conceals the benefits it receives from the cash sweep program, the UBS Financial class action lawsuit alleges.
โUBSโs disclosures contained a multitude of material misrepresentations and omissions that inaccurately presented the terms and operation of the program to plaintiff and members of the proposed class, and thus prevented them from giving informed consent as to the program and UBSโs conflicts of interest,โ Davitt says in the lawsuit.
He argues UBS was in the position of a fiduciary agent for its customers yet negotiated transactions to shift compensation to its affiliated banks instead, causing customers to lose out on interest income.
The UBS Financial class action lawsuit asserts claims for breach of fiduciary duty, gross negligence, unjust enrichment and violations of New York business law.
JPMorgan and Ameriprise were both recently hit with similar class action lawsuits alleging their cash sweep programs unfairly benefit the bank instead of the customer.
Are you enrolled in the UBS Financial cash sweeps program? Tell us about your experience in the comments.
Davitt is represented by Radha Nagamani Raghavan, Michael DellโAngelo, Andrew D. Abramowitz and Alex B. Heller of Berger Montague PC and Alan L. Rosca, Jonathan A. Korte and Paul J. Scarlato of Rosca Scarlato LLC.
The UBS Financial cash sweeps class action lawsuit is Andrew Davitt v. UBS Financial Services Inc., Case No. 1:24-cv-06692, in the U.S. District Court for the Southern District of New York.
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