Swiss authorities say that UBS will turn over between 250 and 300 client names as par

[SysOp]

This is going to hurt :tinysmile_hmm_t2:

UBS Taps Wachtell for Tax Case Settlement; Pays $780 Million FinePosted by Brian Baxter
UPDATE: Swiss authorities say that UBS will turn over between 250 and 300 client names as part of the bank's deferred prosecution agreement with the government. Swiss President Hans-Rudolf Merz says that the country's bank secrecy laws will remain intact despite the deal.


Wachtell, Lipton, Rosen & Katz litigation partner John Savarese represented Zurich-based banking giant UBS as it entered into a deferred prosecution agreement on Wednesday with federal prosecutors that could end an investigation into whether UBS helped U.S. clients avoid paying taxes.


Under the terms of its agreement with the government, UBS will pay a $780 million fine and disclose the names of certain account holders to the Internal Revenue Service. While the government's indictment states its interest in the identities of between 17,000 and 20,000 UBS cross-border clients, the deferred prosecution agreement does not specify how many client names will be turned over to U.S. authorities.


UBS received permission from the Swiss Financial Markets Supervisory Authority (FINMA) to move forward with the agreement, which has been approved by U.S. district court judge James Cohn in Fort Lauderdale.


As part of its agreement with the government, UBS also settled an SEC suit filed on Wednesday in Washington, D.C., which claims that the Swiss bank received more than $380 million in profits by advising U.S. clients as an unregistered brokerage. As part of that settlement, UBS will pay $200 million (included in the $780 million penalty mentioned above) in fines.


The settlement is a coup for the Justice Department and IRS, whose ongoing probe into whether UBS had helped U.S. clients hide assets in overseas accounts in order to avoid paying taxes was stymied by secretive Swiss banking laws.


The investigation itself gained steam after the government unveiled a 12-page indictment in May of former UBS private banker Bradley Birkenfeld and the cofounder of a Liechtenstein-based bank. Birkenfeld pled guilty to fraud charges in June and began cooperating with prosecutors.


UBS turned to Skadden, Arps, Slate, Meagher & Flom litigation partners David Zornow and Lawrence Spiegel to represent Martin Liechti, the head of the bank's wealth management unit in the Americas, when Liechti was detained in Miami last April and hauled before a permanent Senate subcommittee on investigations the following month. (Liechti took the Fifth but was later allowed to leave the country.)


But in November prosecutors announced a grand jury indictment of Raoul Weil, the former chairman of UBS's global wealth management and business banking division, on charges that the 49-year-old executive helped UBS clients in the U.S. avoid income taxes on overseas accounts.


Weil retained former Covington & Burling white-collar defense partner Aaron Marcu, but subsequently failed to show for a hearing and was declared a fugitive by Judge Cohn. Charges against Weil were not dropped as part of the government's agreement with UBS. (Marcu later skipped out on Covington, defecting to Freshfields Bruckhaus Deringer in late January.)


"It is extremely disappointing that the indictment of Raoul Weil was not dismissed as part of the bank's settlement with the United States," Marcu said in a statement. "Mr. Weil is an innocent victim of a political dispute between the United States and Switzerland over Swiss bank secrecy. [An extensive investigation by FINMA] expressly found in a report released today that there was no evidence that Mr. Weil was aware of or participated in any conspiracy to violate U.S. law."


The government's investigation was led by U.S. Attorney for the Southern District of Florida R. Alexander Acosta, acting assistant U.S. attorney general John DiCicco, assistant U.S. attorneys Kevin Downing and Michael Ben'Ary of the tax division at Main Justice, and assistant U.S. attorney Jeffrey Neiman in Fort Lauderdale.


"UBS executives knew that UBS's cross-border business violated the law," Acosta said in a statement released by the Justice Department. "They refused to stop this activity, however, and in fact instructed their bankers to grow the business . . . This was not a mere compliance oversight, but rather a knowing crime motivated by greed and disrespect of the law."


Wachtell's Savarese is probably best known for his role defending Martha Stewart on charges linked to an insider trading scandal at ImClone five years ago. The former federal prosecutor was criticized for his handling of the case by The New Yorker's Jeffrey Toobin in this March 2004 feature story.


But the agreement Savarese helped hash out for UBS has to be considered a satisfactory outcome for Switzerland's largest bank as well, as the bank could have potentially faced the revocation of its banking license in the U.S.


It has been a rough past few months legally for UBS, which turned to Debevoise & Plimpton's Mary Jo White and Andrew Ceresney to help negotiate a $19.4 billion auction-rate securities settlement in August. The ARS investigation resulted in the resignation of David Aufhauser, the former general counsel of UBS's investment banking subsidiary, who later agreed to his own ARS-related settlement with state prosecutors in New York.


With all of these legal entanglements, perhaps it's no surprise that UBS chief executive Peter Kurer, a former general counsel at the company, has spoke openly of trimming the bank's legal bills.

 

[gwenpinay]

Wow, so, now, the Swiss government and a US district judge can make a Swiss bank divulge names of clients... This is unbelievable. Who else banks like the Swiss (used to)?

 

[SysOp]

WOW terrible news, I'm glad not to be one of the US citizens with a bank account in a Swiss Bank.


So far I believe they are the only ones...