On January 30, 2009 an investor of UBS AG (NYSE: UBS) filed a class action lawsuit in the United States District Court for the Southern District of New York on behalf of persons who purchased or otherwise acquired publicly traded securities of UBS AG (NYSE: UBS) between May 4, 2004 and January 26, 2009 against UBS AG over alleged violations of US Federal Securities Laws.
The complaint claims UBS AG boasted of its integrity and touted its risk management and internal controls at the same time it was actively engaged in a tax evasion scheme that it ultimately could not abandon because it was simply too valuable to the bank. The complaint alleges that UBS maintained and benefited from a scheme allowing and encouraging clients to evade U.S. tax law by concealing billions of dollars of funds in “undeclared” Swiss bank accounts. UBS, based in Zurich, helped U.S. clients hide as much as $17.9 billion through offshore accounts, according to a July report by the Senate Permanent Subcommittee on Investigations. The Securities and Exchange Commission also is examining whether UBS failed to register as a broker-dealer or investment adviser. The complaint alleges this also. The plaintiff alleges that UBS’s Swiss bankers have improperly sold securities in the United States without a license in violation of SEC regulations, and have actively conspired to subvert Qualified Intermediary reporting obligations which facilitated tax evasion for U.S. investors. As a result of its alleged malfeasance, UBS now faces a penalty fine in the amount of $1.2 billion, and possibly a felony indictment from the U.S. Government. When the scheme was finally uncovered by U.S. authorities and UBS AG began disclosing the true nature of its Swiss banking business, the UBS stock price plummeted causing substantial losses to UBS shareholders, according to the complaint. The complaint names UBS and eight current or former officers or directors as defendants, including Chairman Peter Kurer and Raoul Weil, the former head of the international wealth management division. The putative Class seeks a recovery of billions of dollars in damages.