Overview
Jonathan Glassberg (the ‘Plaintiff‘) was a private banking investment client of UBS Singapore Branch (the ‘Defendant‘). He was aggrieved when one of the investments in his portfolio “soured”. The Plaintiff alleges that the defendant breached its contractual duties in, amongst other things, not warning the plaintiff that this investment was hazardous and high-risk. The Defendant points out that the Plaintiff failed to appreciate the nature of their relationship, which placed no liability on the Defendant for the Plaintiff’s investment decisions.
The Claim
Mr Glassberg was looked after by a relationship manager (in UBS parlance a “Client Advisor”) called Mr Stephan Freh. Mr Freh built up a good relationship with the Plaintiff and this involved a level of trust between the parties. It is alleged that this trust enabled the Defendant “to attract more investments from the Plaintiff, perpetuating the relationship and payment of even more fees. However, the Plaintiff feels that his trust was betrayed when Mr Freh recommended an investment which emerged to be fraudulent and culminated in the likely loss of the entire investment.”
Know what you own, and know why you own it.”
Peter Lynch, investment manager
The Plaintiff considers that justice demands the Defendant should take responsibility for Mr Freh’s conduct and make good any losses in investments caused by the latter’s conduct.
The judgement explores the legal position of the relationship between a bank and its customer where a contractual relationship exists.
Background
Mr Glassberg had enjoyed a successful career as a broker particularly in non-Yen bond trading firstly at Credit Suisse First Boston, Tokyo. In 2004, he founded and joined JB Drax Honore, which specialised in exchange-traded interest rate options. Mr Glassberg originally had a private banking relationship with JPMorgan but when Mr Freh moved to UBS, the Plaintiff moved to follow him. The Plaintiff opened an investment account with the Defendant on 21st March 2012 and signed the normal account opening documentation which formed the basis of the relationship between the parties. The agreements were updated in 2017 by the Defendant. The Plaintiff also completed an investor profile questionnaire in 2015. It showed that he had financial experience and was classed as a “knowledgeable investor”. In 2016, the Plaintiff also subscribed to the UBS Advice Premium (‘APA Service’) service. This gave him access to an investment specialist should he wish to seek those services. This was governed by additional terms and conditions.
The Investment
In 2017 Mr Freh sent the Plaintiff an email from his UBS email account referencing the Direct Lending Income Fund (‘DLIF’). He referred to another client who had invested some $40m in the fund. He stated clearly that this was “not a UBS recommendation”. No action was taken at that time but when the DLIF came up again in a phone call in November 2017, the Plaintiff agreed to invest US$1m in the fund. A further US$1.5m was invested in the fund in 2018. Later on that year Mr Freh left the employment of UBS.
In 2019, the DLIF announced that there were losses in its loan book and redemptions from the fund were suspended. Subsequently the Securities and Exchange Commission (‘SEC’) opened a case following a complaint against the DLIF’s manager and its CEO. Finally the DLIF manager was put into liquidation. The Plaintiff considers that the holding is of no value.
The Alleged Liability
The Plaintiff claims that “the defendant breached its contractual duty to provide the plaintiff with diligent and careful advice.” “Secondly, the Plaintiff claims that the defendant is in breach of its tortious duty to take care in providing investment advice to the Plaintiff.” “Finally, the plaintiff argues, in the alternative, that even if it can be shown that the DLIF investment was not recommended by the defendant, it was clearly recommended by Mr Freh in his capacity as the defendant’s employee. The Defendant should thus be vicariously liable for Mr Freh’s actions.”
The Defendant maintains that Mr Freh did not have authority to offer the DLIF and that the APA Service did not apply. They further claim, the general Terms and Conditions exclude a duty of care and that the Plaintiff would have invested in the DLIF, anyway regardless of any risks which were disclosed to him.
The Judgement
The presiding judge, Wong Li Kok, Alex JC handed down judgement on the case on 10th January 2025. As part of the judgement he decided that the APA service did not apply as the Plaintiff had not sought the advice of an investment specialist, which was a condition for that part of the service. He also made reference to the financial sophistication of the client in understanding some of the principles and risk of the investment. He observed that all clients are different. The relationship between the two parties was governed by the accepted terms and conditions agreed and signed by the Plaintiff, even if the marketing literature suggested a different level of care.
The judge rejected all the claims and decided that the Defendant had no vicarious liability to the Plaintiff, had no contractual obligation under the terms and conditions which applied or a tortious duty of care to the Plaintiff. The parties’ application for costs were reserved for a future date.
Dr Thomas Walford acted as an Expert Witness in the case and the instructing solicitor wrote:
“I write to thank you for your assistance as an expert witness at trial before the Singapore High Court last year.
Your deep experience in the private banking industry offered our team important insight into the financial industry, in particular how private banks assess and/or conduct due diligence into investment options for their clients.
You were also helpful in pointing out issues with the opposing expert witness’s report, which we were able to address in cross-examination and submissions.“
Link: Jonathan William Glassberg v UBS AG Singapore Branch [2025] SGHC 4 (10 January 2025)
Link: Jonathan William Glassberg v UBS AG Singapore Branch letter confirming contribution of expert.
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