http://www.nytimes.com/2009/02/19/business/worldbusiness/19ubs.html?_r=1&hpIn the latest blow to the secrecy surrounding Swiss banking, UBS agreed on Wednesday to pay $780 million to settle federal claims that it helped wealthy Americans evade taxes and to disclose the names of up to 19,000 clients.
Under the agreement, the bank will not have to pay additional fines and penalties that could have brought its deal to more than $1 billion. People briefed on the issue said the banking crisis and the recession were factors in prosecutors’ decision not to levy the additional fines and penalties.
The action, unprecedented for a financial institution, is a blow for UBS — the world’s largest private bank — and to Swiss banking secrecy with laws that date from the 1930s but with traditions stemming from the Middle Ages.
Under the agreement, UBS admitted to conspiracy to defraud the Internal Revenue Service.
But in a shift from deferred prosecution agreements with other corporations in the past, the Justice Department will not require an outside corporate monitor on UBS. Instead, the bank must submit regular reports to United States authorities on its offshore undeclared banking business for Americans — the practice that has been under investigation.
UBS has said that it was formally closing the accounts associated with that business, but it will have to provide periodic written evidence of that to prosecutors for each account closed.
While the text of the deferred prosecution agreement did not cite the number of American accounts that UBS must now disclose, federal prosecutors have been looking at up to 19,000 such accounts.
UBS had resisted turning over the names, even after some executives were indicted and implicated, in the offshore private banking business.
The move by UBS to settle the case, before a Senate subcommittee hearing next Tuesday, signals how close the bank came to being indicted for not cooperating with prosecutors.
Last month, prosecutors gave UBS “several weeks” to hand over scores of United States client names or face possible indictment. Prosecutors suspect that from late 2002 through 2007, UBS helped these clients hide $20 billion in violation of United States tax laws, thereby evading $300 million a year in taxes.
UBS Agrees to Settle, Reveal Client List
UBS Agrees to Settle, Reveal Client List
This is huge news. UBS put themselves in a real tight spot, because they got caught helping their clients evade U.S. taxes, but operate under Swiss law which forbids them from giving up client info. Looks like they decided they're more scared of Uncle Sam. There was an article in either Bloomberg Markets or Portfolio last year about some of the stuff they were doing--they had one broker who was sneaking diamonds out of the country for a Russian client. Crazy, stupid stuff.
