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UBS AG
Type Aktiengesellschaft (AG)
Public (NYSEUBS; SWX:UBSN; TYO: 8657)
Predecessor Union Bank of Switzerland and Swiss Bank Corporation merged in 1998
Founded 1854
Headquarters Zürich & Basel, Switzerland
Key people Kaspar Villiger, Chairman
Sergio Marchionne, Vice Chairman
Oswald Grübel, Group CEO
Industry Finance
Products Financial services
Operating income CHF -2.6 billion (full year 2009)
Net income CHF -2.7 billion (FY 2009)[2]
Employees 65,233 (as of end 2009)
Website UBS.com
The UBS Tower in Chicago

UBS AG (NYSEUBS; SWX: UBSN; TYO: 8657) is a diversified global financial services company, with its main headquarters in Basel and Zürich, Switzerland. It is the world's second largest manager of private wealth assets, [1] and is also the second-largest bank in Europe, by both market capitalisation and profitability. UBS has a major presence in the United States, with its American headquarters located in New York City (Investment banking); Weehawken, New Jersey (Private Wealth Management); and Stamford, Connecticut (Capital markets). UBS's retail offices are located throughout the U.S., and in over 50 other countries. UBS is an abbreviation, which originated from a predecessor firm, for the Union Bank of Switzerland; however, UBS ceased to be considered a representational abbreviation after its 1998 merger with Swiss Bank Corporation.[2]

UBS is present in all major financial centers worldwide. It has offices in over 50 countries, with about 38% of its employees working in the Americas, 34% in Switzerland, 15% in the rest of Europe and 13% in Asia Pacific. UBS's global business groups are wealth management, investment banking, and asset management. Additionally, UBS is the leading provider of retail banking and commercial banking services in Switzerland, as of 2009. Overall invested assets are 3.265 trillion Swiss francs (CHF), shareholders' equity is 47.850 billion CHF and market capitalization is 151.203 billion CHF by the end of 2Q 2007.

In 2007, after incurring huge losses, UBS was forced to turn to the Government of Singapore for fresh funding. Since then, the largest shareholder of UBS is Government of Singapore Investment Corporation.[3][4] In November 2008, following further dramatic losses, UBS managers pledged to return bonuses.[5] UBS shareholders voted to accept financial aid from the Swiss government, to restore the shaken trust in UBS.[6]

In some ways, UBS has evolved on a similar path to its cross-town rival Credit Suisse. Both are Swiss commercial and retail banks which bought major U.S. investment banks and both are currently being investigated by U.S. authorities for allegedly helping 17,000 American citizens to evade taxes.[7] In an unprecedented move on 18 February 2009, UBS, based on an order by the Swiss Financial Market Supervisory Authority (FINMA), has agreed to immediately provide the United States government with the identities of, and account information for, about 250 American clients and to pay US$780 million in fines and restitution.[8]

UBS issued on Tuesday, January 13, 2010, a new code of conduct and business ethics which all employees are asked to sign. The code addresses issues such as financial crime, competition, confidentiality, as well as human rights and environmental issues. The eight-page code also lays out potential sanctions against employees who violate it, including warnings, demotions or dismissal. According to Kaspar Villiger, Chairman of the Board and Oswald J. Grübel, Group CEO, the code is "an integral part of changing the way UBS conducts business".[9]

Contents

History

UBS headquarters in New York
UBS headquarters in London, Liverpool Street 100

UBS was the result of the merger of the Union Bank of Switzerland and the Swiss Bank Corporation (SBC) in June 1998. Although the merged company's new name was originally supposed to be the "United Bank of Switzerland," officials opted to call it simply "UBS" because of a name clash with United Bank Switzerland - a part of the United Bank Limited's Swiss subsidiary. UBS is no longer an acronym but is the company's brand, like 3M. Its logo of three keys, carried over from SBC, stands for confidence, security, and discretion.[10]

Prior to the merger, SBC had built a global investment banking business through its acquisitions of Dillon Read in New York and S.G. Warburg in London. The first chairman of the merged bank had to step down in October 1998 due to the Long-Term Capital Management crisis, which affected the Union Bank of Switzerland. In 2000, UBS acquired PaineWebber Group Inc. to become the world's largest wealth management firm for private clients. Invested assets in all wealth management businesses, including the U.S., total CHF 3.265 trillion.

On 9 June 2003, all UBS business groups rebranded under the UBS name as the company began operating as one large firm. UBS Paine Webber, UBS Warburg, UBS Asset Management, and others became simply "UBS". As a result of the rebranding, UBS took a $1B writedown for the loss of goodwill associated with the retirement of the Paine Webber brand.

Swiss bank UBS AG reported on 1 April 2008 that it expected to post net losses of 12 billion Swiss francs (US$12.1 billion) for the first quarter of 2008 and would seek 15 billion Swiss francs (US$15.1 billion) in new capital. UBS, hard hit by the U.S. Subprime mortgage crisis, also said it sees losses and writedowns of approximately US$19 billion on U.S. real estate and related credit positions.[11] In April 2008 UBS's long term credit ratings were cut to AA- by Fitch Ratings and Standard & Poor's, and Aa1 by Moody's.

On 16 October 2008, UBS announced they had CHF 6 billion of new capital through mandatory convertible notes, fully placed with Swiss Confederation. The SNB (Swiss National Bank) and UBS made an agreement to transfer approximately USD 60 billion of currently illiquid securities and various assets from UBS to a separate fund entity.[12]

On 4 November UBS announced that their third quarter Group net profit was in line with their 16 October pre announcement, with net profit attributable to UBS shareholders standing at CHF 296 million.

This quarter was affected by a further CHF 4.8 billon of write-downs and losses on risk positions, gain on own credit of CHF 2.2m and a tax credit of over CHF 900m.[13]

UBS announced on 12 November 2008 that from 2009 no more than one-third of any cash bonus would be paid out in the year it is earned with the rest held in reserve. Share incentives would also vest after three years, and top executives would have to hold 75% of any vested shares, with share bonus accounts subject to “malus” charges.

It was also confirmed UBS chairman Peter Kurer would no longer have any extra variable compensation – just a cash salary and a fixed allotment of shares, which cannot be sold for four years. This aligned the chairman’s rewards with group performance while minimising risk. UBS also said that Kurer hoped that others would follow his lead. It was possible that regulators and influential groups such as the Financial Stability Forum would help his cause.[14]

In November 2008, UBS put $6 billion of equity into the new “bad bank” entity, keeping only an option to benefit if the value of its assets were to recover. Heralded as a “neat” package by the NY Times, the UBS structure guaranteed clarity for UBS investors by making an outright sale.[15]

On Friday, 30 January 2009, SNB Chairman Jean-Pierre Roth, the head of the Swiss National Bank, was quoted on Reuters as saying that UBS and Credit Suisse are the two best capitalised banks in the world.[16]

On Monday, 9 February 2009, UBS announced that it lost nearly 20 billion Swiss francs (US$17.2 billion) in 2008, the biggest single-year loss in the history of Switzerland.[17]

On Tuesday, 10 February 2009, UBS confirmed the Board of Directors and the Group Executive Board's commitment to each of the UBS business divisions and strategy. Despite difficult market conditions, it was stated that UBS has made substantial progress in adjusting its operations and has prepared itself for the new market environment, with a "substantial reduction" in risk positions during the fourth quarter.[18]

UBS is resolving investigations relating to its US cross-border business by entering into a deferred prosecution agreement with the US Department of Justice and a Consent Order with the US Securities and Exchange Commission. Of the $780 million that UBS will pay, $380 million represents disgorgement of profits from its cross-border business. The remainder represents United States taxes that UBS failed to withhold on the accounts. The figures include interest, penalties and restitution for unpaid taxes. As part of the deal, UBS also entered into a consent order with the Securities and Exchange Commission in which it agreed to charges of having acted as an unregistered broker-dealer and investment adviser for Americans.[19]

On March 11, 2009 UBS AG posted a revised FY 2008 reported 20.9 billion CHF ($18 billion) loss.It was reported UBS was “extremely cautious” about the outlook for 2009.[20]

At the Annual General Meeting on April 15 2009, UBS announced it was planning to cut 8,700 jobs on its return to profitability.[21] Due to the global financial crisis, UBS has had to make about $50bn in write-downs and announce 11,000 job cuts since 2007.

On April 21, UBS announced that it has agreed to sell its Brazilian financial services business, UBS Pactual, for approximately USD 2.5 billion to BTG Investments.[22] The sale of the Brazilian business is in line with UBS’s other measures aiming to reduce its risk profile and to become more profitable.

On Monday April 27, the head of the investment bank division Jerker Johansson resigned with immediate effect. He was replaced by Alexander Wilmot-Sitwell and Carsten Kengeter as Co-CEOs of the investment bank branch.[23]

On May 1 2009, UBS formally cut ties to private banker Raoul Weil, who faces U.S. federal grand jury charges. In November 2008, Raoul had been suspended after he was indicted in correlation to the tax evasion affair.[24]

On May 5 2009, UBS confirmed a first quarter net loss of two billion Swiss francs ($1.75 billion), which was less than initially expected.[25]

On May 20 2009, UBS restated its 2008 annual report. The bank announced a further reduction in net profit of CHF 450 million, and reduction in equity and equity attributable to UBS shareholders of CHF 269 million. [26]

On June 25, 2009, UBS announced the appointment of Chi-Won Yoon as Chairman & CEO of Asia Pacific succeeding Rory Tapner, who is leaving the bank after 25 years. [27]

Taking advantage of current market conditions, UBS strengthened its capital base by placing 293.3 million shares from existing authorized capital. The shares were placed with a small number of large institutional investors. UBS claims that this capital raising aims at strengthening confidence in UBS and the Swiss financial center, which is consistent with the view of the regulators. [28]

On August 4, 2009, UBS announced a second quarter loss of CHF 1.4 billion ($1.32 billion).[29]

On August 20, 2009, the Swiss government announced it was selling its CHF 6 billion stake in UBS, making a significant profit; it had purchased 332.2 million mandantory convertible notes in 2008 to help UBS clear its balance sheets of toxic assets.[30]

On September 29, 2009, UBS announced that two directors, Sergio Marchionne and Peter Voser will not stand for re-election to the board at the general assembly in April.[31]

On November 3, 2009, UBS announced a third quarter net loss of CHF 564 million. After adjusting the pre-tax loss for three substantial accounting charges totaling CHF 2,150 million, the underlying pre-tax profit was CHF 1,557 million, a further improvement compared with the prior quarter. The improvement in underlying Group profitability was driven by better performance in the Investment Bank's fixed income, currencies and commodities business.[32]

The UBS Investor Day 2009 took place on 17 November 2009. UBS CEO Oswald Grübel addressed key shareholders stating, “We are building a new UBS, one that performs to the highest standards and behaves with integrity and honesty; one that distinguishes itself not only through the clarity and reliability of the advice and services it provides but in how it manages and executes." Switzerland’s largest bank plans to reach pretax profit of 15 billion Swiss francs, or $14.9 billion, and a return on equity — a measure of profitability — of 15 percent to 20 percent sometime between 2012 and 2014. The bank said it would stick to its business model of providing wealth management, investment banking and asset management services and would focus on the “integrity” of its operations.[33]

On 24 November 2009, UBS said that a report issued by Standard & Poor's isn't representative of the bank's capital position in relation to its peers. UBS said the bank's risk-adjusted capital ratio, or RAC, is estimated to be 7.1%, and not the 2.2% reported by S&P. The bank issued the following statement, "Their report shows a RAC as of 30 June 2009 which does not take into account two important components of UBS' capital; the 6 billion Swiss francs [$5.9 billion] mandatory convertible notes (MCNs) fully converted in August 2009 and the CHF13 billion MCNs due to convert by March 2010."[34]

In November 2009, UBS ranked No. 1 in Switzerland, and No.2 globally in the Lundquist CSR Online Awards 2009. The award is given for demonstrating best online CSR communications. [35]

On February 2 2010, UBS topped the charts for the ninth year in a row in Institutional Investor's annual ranking of developed Europe's most highly regarded equity analysts. In a year of extremes for the equity markets, money managers say that no firm did a better job than UBS of keeping them informed about which European sectors, countries and industries offered the greatest potential.[36]

On 9 February 2010, UBS reported a 2009 fourth quarter profit of CHF 1,025 million, with all business divisions also reporting a pre-tax profit in fourth quarter 2009. UBS CEO Grübel says UBS is delivering on its plan to build a new UBS, as demonstrated by its return to profitability and strengthened capitalization.[37]

Management

The Board of Directors is the most senior corporate body with ultimate responsibility for the strategy and the management of the company and for the appointment and supervision of its executive management.[38] Its members are:

The Group Executive Board is the executive body of the company. Its members are:

  • Group Chief Executive Officer: Oswald Grübel
  • Group Chief Operating Officer & Chief Executive Officer of Corporate Center: Dr Ulrich Körner
  • Group Chief Financial Officer: John Cryan
  • Group General Counsel: Dr Markus U. Diethelm
  • Group Chief Risk Officer: Philip Lofts
  • Chairman and Chief Executive Officer, Global Asset Management: John A. Fraser
  • Chairman and Chief Executive Officer, Investment Bank: Alex Wilmot-Sitwell and Carsten Kengeter (joint)
  • Chairman and Chief Executive Officer, Wealth Management Americas: Robert J. McCann
  • Chairman and Chief Executive Officer, Wealth Management & Swiss Bank: Dr Franco Morra and Juerg Zeltner (joint)
  • Chairman and Chief Executive Officer, UBS Group Asia Pacific: Chi-Won Yoon
  • Chairman and Chief Executive Officer, UBS Group EMEA: Alex Wilmot-Sitwell
  • Chairman and Chief Executive Officer, UBS Group Americas: Robert Wolf

Chairman Marcel Ospel did not seek re-election at the 23 April 2008, annual general assembly of shareholders and was succeeded by Peter Kurer, who was general counsel, the bank said, in a statement on 1 April 2008.[39] On 26 February 2009, Marcel Rohner resigned and was succeeded by Oswald Grübel.[40] On 4 March 2009, UBS announced that chairman Peter Kurer would be succeeded by Kaspar Villiger in April.[41]

On 1 April 2009, the CEO of the UBS group Oswald Grübel hired Ulrich Körner, in a newly established role as Chief Operating Officer (COO) and CEO of Corporate Center. Körner's task will be to cut administrative expenses and boost profits.[42]

Competition

Credit Suisse, Deutsche Bank, Morgan Stanley, JP Morgan, HSBC, Barclays, Santander, Citigroup, Goldman Sachs, Merrill Lynch / Bank of America, Zürcher Kantonalbank, Raiffeisen, PostFinance, Migros Bank and Kantonalbank,Princeridge

Workplace

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Diversity

UBS North American headquarters building in Stamford, Connecticut: Trading floor is beneath bowed roof

UBS was named one of the 100 Best Companies for Working Mothers living in the U.S. in 2006 for the fourth consecutive year[43] by U.S. based Working Mother magazine. It is a member of the Stonewall Diversity Champions scheme and has active Gay and Lesbian, ethnic minority, and women's networking groups. UBS was included on Business Week's The Best Places to Launch a Career 2008, and ranked #96 out of the 119 total companies listed.[44]

UBS building in Midtown Manhattan.

Sponsorship Deals

Global Sponsorships

  • UBS Japan Golf Tour Championship
  • UBS Hong Kong Open
  • Faldo Series Asia
  • Arnold Palmer Invitational
  • THE PLAYERS Championship
  • UBS and Classical Music
  • The UBS Art Collection (Art Basel, Art Basel Miami Beach, Tate Modern Collection, The UBS Art Gallery)
  • Cy Twombly exhibition

Sponsorships in Switzerland

  • Spengler Cup Davos
  • Murten to Fribourg: Commemorative Race
  • Athletissima
  • AVO Session Basel
  • Zürich Opera House & Zürich Ballet
  • Open-air Cinema

Archived News

WW2 Archives

  • In January 1997, Christoph Meili, a night watchman at the Union Bank of Switzerland (a predecessor bank of today's UBS), found employees shredding archives compiled by a subsidiary that had extensive dealings with Nazi Germany, in direct violation of a recent Swiss law (adopted on 13 December 1996) protecting such material. UBS acknowledged that it had "made a deplorable mistake", but maintained that the destroyed archives were unrelated to the Holocaust. Criminal proceedings then began against the archivist for possible violation of a recent Federal Document Destruction decree and against Meili for possible violation of bank secrecy, which is a criminal offence in Switzerland. Both proceedings were discontinued by the District Attorney in September 1997. Meili was suspended from his job at the security company that served UBS, following a criminal investigation.[45]

Swissair

  • In 2001, UBS was portrayed as responsible for refusing to extend Swissair's line of credit, forcing a grounding of Swissair's planes on 2 October 2001. UBS Chairman Marcel Ospel was blamed by many for ostensibly evading the request for an extension of Swissair's line of credit, and the day after the grounding, thousands of demonstrators marched in front of the Swissair headquarters. UBS Chairman Marcel Ospel claims to have repeatedly advised Swissair management that their situation was extremely grave and that a restructuring was inevitable.

Securities

  • On 20 March 2003, UBS client HealthSouth and its founder/CEO Richard M. Scrushy were accused by the U.S. Securities and Exchange Commission (SEC) of an accounting scandal where the company's earnings were falsely inflated by $1.4 billion. In 1996, Scrushy allegedly instructed the company's senior officers and accountants to falsify company earnings reports in order to meet investor expectations and control the price of the company's stock. Three senior bankers at UBS, Howard Capek, Benjamin Lorello and William McGahan, testified for congressional hearings, but no one was convicted of any wrongdoing. McGahan,[46] resigned on 10 April 2004 for "personal" reasons not related to the scandal.[47]
  • In 2004 UBS paid a penalty of $100 million to the US for sending dollars to Cuba, Libya, Irand and Yugoslavia in violation of US sanctions.[48]
  • An article published in BusinessWeek on 26 February 2007, announced that the firm was under investigation after it was discovered that traders working for at least two unidentified hedge funds were paying a UBS employee for information on impending ratings changes on stocks. [3] It was later announced on 1 March, that an executive director in the firm's equity research department, was being charged along with 13 other individuals from various firms with insider-trading fraud of more than $15 million.[49]
  • In an article published by Reuters on Feb. 23, 2008, Brazilian public prosecutor Karen Kahn announced that several employees of UBS as well as others from Credit Suisse, Clariden Leu and AIG were under investigation by federal authorities.[50] In 2007, police arrested 20 people, including bankers at UBS, Credit Suisse unit Clariden and AIG Private Bank after the discovery of illegal activities including money laundering, tax evasion, fraudulent banking and operating without a banking license.[51]
  • On 15 January 2009, the website Swissinfo.ch reported that French wealth management group Oddo et Cie sued UBS on 14 January 2009 in court in Luxembourg for 30 million over loss of investment due to alleged UBS exposure to the Bernard Madoff hedge funds.[52]
  • On 20 January 2009, French prosecutors opened an investigation on behalf of French citizens and institutions who claim losses due to Madoff. One part of the investigation is over the AlphaLux fund set up by UBS, which counters that the bank set up the Luxembourg-based fund at the explicit request of investors who specifically asked for the ability to invest with Madoff, but Madoff was never on UBS's list of preferred investments.[53]

Lawsuits

  • In 1997, the World Jewish Congress lawsuit against Swiss banks (WJC) was launched to retrieve deposits made by victims of Nazi persecution during and prior to World War II. Negotiations involving Union Bank of Switzerland, Credit Suisse, the WJC, and US Undersecretary Stuart Eizenstat ultimately resulted in a settlement of $1.25 billion in August 1998.[54][55]
  • In April 2002, Bank of America sued five ex-employees who left its asset- and mortgage-backed securities groups for UBS, alleging that the five conspired to steal trade secrets, proprietary software and clients from Bank of America. Bank of America filed a lawsuit for US$ 20 million against Shahid Quraishi, Peter Faigl, Paul Scialabba, Reggie DeVilliers, and Daniel Huang, who had previously worked for their asset-backed group based in Charlotte, North Carolina.[56]
  • In April 2005, UBS lost the discrimination and retaliation suit Zubulake v. UBS Warburg. The plaintiff Laura Zubulake, a former institutional equities saleswoman at the company's Stamford office, alleged her manager had undermined and removed her from professional responsibilities and generally treated her differently from the men on her desk. An important event in the case was that UBS had not preserved relevant e-mails after the litigation hold had been in place. Because of this, federal judge Shira Scheindlin gave the jury a final "adverse inference" instruction, in part stating, "The fact that some UBS employees failed to preserve their e-mails after being instructed to do so, and that such e-mails cannot now be produced, is sufficient circumstantial evidence from which you are permitted, but not required, to conclude that the missing evidence was unfavorable to UBS". October 2005, the parties agreed to settle the case privately. [57]
  • On 18 October 2005, three African-American employees filed a class action lawsuit against the company in the United States District Court for the Southern District of New York alleging racial discrimination in employment practices. The three plaintiffs in Freddie H. Cook, Sylvester L. Flaming Jr. and Timothy J. Gandy v. UBS Financial Services, Inc., claim that segregation and discrimination in job assignments and compensation were widespread and the firm had done nothing to diversify its workforce. The lawsuit also claims offices operating in Largo, Maryland and Flushing, New York were created to serve African-Americans and Asian-Americans respectively. On 23 April 2007, U.S. District Judge, Peter J. Messitte, granted plaintiff's request to dismiss the class allegations without prejudice. [58][59]
  • On 10 September 2007, William Jester, the former head of UBS Securities' U.S. municipal bond department sued the investment bank for age discrimination. Jester alleges that the firm had lowered his performance ratings and bonus level in order to push him out in favor of younger employees.[60]

2007–2009

  • During the second quarter of 2007. Peter Wuffli stepped down as CEO of the firm. In the course of 2009 more than US$19 billion in mezzanine debt and more than US$20 billion in total subprime exposure were written off, forcing UBS to cut its dividend or increase capital in order to protect UBS's traditionally high tier 1 capital ratio, seen by investors as a key to its credibility as the world's largest wealth management company.[61][62]
  • On 1 April 2008 UBS announced that it was writing down a further $19 billion on its investments in American subprime and other mortgages, as part of an unexpected SFr12 billion projected loss in the first quarter. The Swiss bank also said it would call on its shareholders to supply SFr15 billion in additional funds to shore up its depleted reserves of capital. That means shareholders face dilution. As a result, Marcel Ospel, architect of the merger that created UBS in 1998, said he would step down as chairman, to be replaced by Peter Kurer, the bank’s general counsel.
  • On 6 May 2008, UBS announced plans to cut 5,500 jobs by the middle of 2009 as a consequence of the economic crisis.[63]
  • It was reported on 22 June 2008 that the US Federal Bureau of Investigation had made a formal request to travel to Switzerland to probe a multi-million-dollar tax evasion case involving UBS.[64] The New York Times reported that the case could involve some 20,000 US citizens. This is reported to be a consequence of information revealed in 2006 by a UBS client at risk of prosecution for US tax evasion.[65]
  • On 17 July 2008, the United States Senate disclosed that the U.S. loses around $100 billion annually due to offshore tax evasion.[66] The report accused UBS AG and Liechtenstein's LGT Group for allegedly marketing tax-evasion strategies to wealthy Americans.[67] U.S. clients hold about 19,000 accounts at UBS, with an estimated $18 billion to $20 billion in assets, in Switzerland, according to the findings.[68]
  • UBS announced on 17 July 2008, that it would cease providing cross-border private banking services to US-domiciled clients through its non-US regulated units.[69]
  • On 12 November 2008, UBS confirmed that Raoul Weil, Chairman and CEO of UBS Global Wealth Management and Business Banking and member of the Group Executive Board, has been indicted by a Federal grand jury in the Southern District of Florida in connection with the ongoing investigation of UBS's US cross-border business by the United States Department of Justice. Weil has relinquished his duties pending the resolution of this matter. Marten Hoekstra, Deputy CEO of Global Wealth Management & Business Banking and Head of Wealth Management US, has assumed Raoul Weil's duties in the interim.[70] On 13 January 2009, in an article about the Bernard Madoff scandal, the Associated Press reported "In a separate case also affecting wealthy investors, former UBS AG wealth management chief Raoul Weil was formally declared a fugitive on Tuesday after failing to surrender to U.S. authorities on charges of conspiring to help wealthy Americans hide assets to avoid paying taxes."[71]
  • On 18 February 2009, UBS agreed to pay a fine of $780 million to the U.S. Government and entered into a deferred prosecution agreement on charges of conspiring to defraud the United States by impeding the Internal Revenue Service (IRS). The Swiss Financial Market Supervisory Authority (FINMA)gave the United States government the identities of, and account information for, certain United States customers of UBS’s cross-border business.[72][73] In addition, the Securities and Exchange Commission charged UBS with "acting as an unregistered broker-dealer and investment advisor" and filed an enforcement action against the corporation.[74]
  • On 19 February, the U.S. government filed suit against UBS to reveal the names of all 52,000 American customers, alleging that the bank and these customers conspired to defraud the IRS and federal government of legitimately owed tax revenue.[75] On the 12 July 2009 a settlement between the US Department of Justice and UBS appeared more likely when both parties asked for a three-week delay in the hearing to allow time for an alternative resolution to be discussed.[76] An editorial piece in the Wall Street Journal on the 14th July, in direct response to the UBS Department of Justice matter, commented that President Obama and his administration appear to be expending a lot of energy trying to “re-set” diplomatic relations with countries such as Iran and Russia yet are succeeding in damaging a long and amicable relationship with Switzerland.[77] On 12th August 2009, UBS welcomed a settlement deal that ends its litigation with the U.S. Internal Revenue Service. UBS Chairman Kasper Villiger stated "the board of directors and the management of UBS are grateful that the two governments reached this agreement to resolve this issue, and we thank the Swiss government and the Swiss delegation that negotiated this settlement for their outstanding efforts."[78] On 19 August 2009, UBS announced the formal signing of a settlement agreement with the US Internal Revenue Service (IRS) regarding the John Doe summons issued on 21 July 2008. The agreement does not call for payment from UBS and both parties will promptly file a stipulation with the court dismissing the enforcement action relating to the John Doe summons. The agreement also resolves all issues relating to the alleged breaches of UBS's Qualified Intermediary Agreement with the IRS as set forth in the Notice of Default dated 15 May 2008. UBS Chairman Kaspar Villiger said: "This agreement helps resolve one of UBS’s most pressing issues. I am confident that the agreement will allow the bank to continue moving forward to rebuild its reputation through solid performance and client service."[79]
  • On April 2, 2009, Steven Michael Rubinstein, 55, of Boca Raton, Florida, a yacht company accountant, was arrested for tax evasion, allegedly hiding assets from tax collectors in the Swiss bank. Rubinstein deposited more than $2 million in Kruggerrand gold coins into his UBS accounts and bought securities worth more than 4.5 million Swiss Francs, and he met with UBS bankers in several locations around South Florida from 2001 through 2008. In 2008, former UBS banker, Bradley Birkenfeld pleaded guilty to fraud conspiracy charges and has been cooperating with U.S. investigators.[80]
  • On 15 June 2009, it was reported that Benjamin 'Ben' Lorello, head of the IB healthcare team along with 35 colleagues of his senior management team unexpectedly, defected to rival Jefferies. Lorello, who was a former critic of Jefferies and once branded the mid-sized U.S. investment bank as a "low quality firm" with "no track record" in the industry[81], left UBS after the investment division after enduring many numerous financial and personnel losses during the past year. UBS immediately filed a lawsuit against Jefferies for claiming that the firm illegally lured and hired Lorello and 35 other members of their lucrative healthcare team.[82] The suit was settled by both parties on July 14, 2009.[83]

References

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