The U.S. government has taken its pound of flesh from UBS today. According to a Department of Justice press release, Switzerland’s largest bank has settled with the U.S. government, admitting to helping U.S. taxpayers hide accounts from the IRS.
The Department of Justice release says UBS has entered into a “deferred prosecution agreement on charges of conspiring to defraud the United States by the impeding the Internal Revenue Service.” UBS will be required to pay $780 million fines—$200 million in immediate disgorgement followed by deferred payments of an additional $180 million and $400 million in tax-related payments, according to the release. Additionally, UBS also must hand over the identities and account information of its American tax-dodging clients, as well as “exit the business of providing banking services to U.S. clients with undeclared accounts.” To view the Department of Justice release, click here.
“The broker-dealer and investment advisor registration provisions provide important protections for investors,” said Scott W. Friestad, Deputy Director of the SEC’s Division of Enforcement, in the SEC’s release regarding the matter. “UBS avoided compliance with U.S. securities laws for many years, at the same time they were engaged in other illegal conduct, which makes this one of the most egregious cases of its kind,” he said. To view the SEC’s release, click here.
UBS Chairman, Peter Kurer, had this to say in a release from the firm: “UBS sincerely regrets the compliance failures in its U.S. cross-border business that have been identified by the various government investigations in Switzerland and the U.S., as well as our own internal review. We accept full responsibility for these improper activities. We are firmly committed to the terms of the settlement agreements we have reached with the DOJ and the SEC. We are determined to fully comply with the terms of these agreements and will complete the process without delay.”
One thing’s for sure, a lot of money was being made. Also from the SEC’s release: As alleged in the SEC’s complaint, from at least 1999 through 2008, UBS acted as an unregistered broker-dealer and investment advisor to thousands of U.S. persons and offshore entities with United States citizens as beneficial owners. UBS had at least 11,000 to 14,000 of such clients and held billions of dollars of assets for them. The U.S. cross-border business provided UBS with revenues of $120 million to $140 million per year.
For our recent story about UBS’s fourth quarter earnings, click here.
