Hello,
I thought that NRA were excluded from having to pay cap. Gains taxes. However when my brother closed a Fidelity account in 2008 they withheld 28% of the proceeds (even though there is a tax treaty that puts the tax on dividends at a max of 15%.) Fidelity later said that not all the W8-BEN information had been received at the time of the account closure). The said thing is that there is not even a capital gain in the first place. Is the broker right to withhold ?

Your brother may file a 1040NR (see page 4 of the Form) to obtain a refund of tax withheld. However, he will need an ITIN if he does not have one.

If he does not have one, complete the W7 and enclose all necesssary documents and the tax return and send to:
Internal Revenue Service
ITIN Operation
P.O. Box 149342
Austin, TX 78714-9342

If he does have an ITIN just submit the tax return to the normal address.
He will get his money back.