Arbitrators Award $1.2M to Client in UBS Dispute

A Financial Industry Regulatory Authority arbitration panel ordered UBS to pay more than $1.2 million to former client Kelly Goldsmith after finding the firm’s recommendations harmed her savings.

The three-panel arbitration awarded nearly $1.18 million in compensatory damages plus about $37,000 for legal costs. The panel issued its decision this week and did not provide a written explanation, as is common in FINRA cases.

Goldsmith’s attorney, Bruce Oakes of Oakes and Fosher in St. Louis, said Goldsmith inherited about $900,000 after her husband’s death roughly 12 years ago. Oakes said about one-third of that money was placed into an annuity, a product that pays income but can carry high fees. He said $270,000 from the sale of Goldsmith’s South Carolina home was placed in an advisory account that generated management fees and triggered UBS’s fiduciary duty.

Oakes told the panel that when Goldsmith sought to use the home-sale proceeds to buy a house in Hilton Head, North Carolina, her advisor recommended a securities-backed loan instead of providing the cash. According to Oakes, that arrangement let UBS collect interest on the loan while continuing to charge advisory fees on the account.

Oakes also criticized the account’s trading approach and relied on expert testimony comparing Goldsmith’s returns to a hypothetical stock portfolio. He presented testimony showing annual gains under 1% from 2013 through 2023, during a bull market period.

The attorney brought claims against UBS and the advisor for breach of fiduciary duty, breach of contract, negligence, fraud, negligent supervision and other violations. Goldsmith initially sought $400,000 in damages and later raised the claim to $2 million.

UBS declined to comment. The FINRA award against UBS does not name the advisor. Oakes identified the advisor as John H. Saunders; Saunders’s BrokerCheck record lists six disputes dating to 2009, with three settled, two denied by UBS and one still pending. In a 2014 matter, UBS agreed to pay $100,000 to settle an allegation tied to Saunders; Saunders added written comments in that file denying wrongdoing and said the settlement avoided further litigation.

Douglas Schulz, president of Invest Securities Consulting, described multiple complaints over years as a red flag for a broker, noting most licensed brokers have few or no disputes.

Cases that require proving what an investor would have earned under different advice can be hard to argue because firms often point to risk disclosures and market uncertainty. Still, FINRA panels have recently granted substantial awards in some investor disputes.

The arbitration award does not end Goldsmith’s litigation. She is among plaintiffs suing major wealth managers in federal court over cash-sweep practices, which move uninvested account money into bank deposits that firms then lend out. Goldsmith sued UBS in 2024 in the U.S. District Court for the Southern District of New York. Judge Gregory Woods allowed her and another plaintiff to pursue breach of contract claims while dismissing unjust enrichment claims as duplicative.