UBS to Pay $780M to Settle SEC Charges

     (CN) – The second largest bank in Europe, UBS AG, has agreed to pay $780 million to settle SEC charges of unethical investment practices that allowed clients to avoid taxes through offshore accounts.




     The Securities and Exchange Commission brought charges against UBS on Wednesday citing the firm for operating unregistered as a broker-dealer and investment adviser. The final amount of the settlement includes $500 million in disgorgement and tax related payments UBS is ordered to pay in connection with a related criminal investigation conducted by the Department of Justice.
     As alleged by the SEC in its complaint, UBS from at least 1999 through 2008 has unlawfully acted as a broker-dealer and investment advisor to approximately 14,000 U.S clients. UBS’s clientele also included offshore entities with U.S citizens as the beneficial owners. According to the SEC, UBS, through is illegal and unethical practices, has enabled its clients to avoid paying taxes on assets associated with undisclosed offshore accounts. UBS held billions of dollars worth of assets for these clients, generating revenues of $120 million to $140 million per year.
     The Swiss company conducted cross boarder business primarily through unregistered client advisors who allegedly travelled to the U.S. carrying encrypted laptop computers that they used to provide clients with account related information and to communicate orders and transactions to UBS’s Swiss headquarters.
     The SEC alleges that UBS was aware that it was required to be registered but went the extra mile to conceal its use of U.S. jurisdictional means to provide securities services.
     The advisors were allegedly trained on how to avoid being detected by U.S. authorities. During the trips, which took place two to three times per year, advisors would go to art shows, yachting events, and sporting events with clients or prospective clients, all funded by UBS, says the SEC. The SEC’s is continuing its investigation into UBS’s violations of securities laws

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