Legal News

Wealthy Americans Take Suit Offshore, Sue UBS in Switzerland

By Ashby Jones

The smackdown between UBS and the U.S. Justice Department — and UBS’s awkward positioning between Swiss and U.S. law — continues to fascinate us. And the story continues to move, quickly.

The latest: A group of wealthy American clients sued UBS in Swiss court on Tuesday, in an effort to prevent the disclosure of their identities as part of a tax-evasion investigation by the DOJ. Click here for the NYT story; here for a previous Law Blog post on the UBS situation.

The lawsuit filed Tuesday — on behalf of nearly a dozen American clients — accuses UBS and Switzerland’s financial regulator of violating Swiss bank secrecy laws and of conducting what Swiss law considers illegal activities with foreign authorities. Tax evasion is not considered a crime in Switzerland. Disclosing client names under Swiss law is a criminal offense and can expose bank executives and officers to fines, prison terms and other penalties.

The suit stems from UBS’s agreement last week to turn over to U.S. authorities the names of 250 wealthy Americans suspected of using secret UBS offshore accounts and entities to evade taxes.

UBS reached a $780 million deferred-prosecution agreement to settle accusations that it used undisclosed offshore private banking services to help wealthy Americans evade taxes. But the bank is still under scrutiny by the Justice Department, which is seeking to force it to disclose the names of the 52,000 American clients it suspects may have evaded taxes.

Full post as published by Law Blog - WSJ.com on February 25, 2009 (boomark / email).