UBS settles tax evasion case

Government lawyer says the U.S. and the Swiss bank have agreed to settle a dispute over wealthy American clients suspected of tax evasion.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)

When do you think the economy will improve?
  • In the next few months
  • In six months to a year
  • In a year or more
  • It's already on the mend

MIAMI (Reuters) -- Swiss bank UBS AG and the U.S. government have agreed to settle a long-running dispute over the disclosure of names of wealthy American clients suspected of tax evasion, a U.S. government lawyer said Wednesday.

The settlement is expected to involve the disclosure to U.S. authorities of thousands of names of people suspected of using offshore accounts to conceal assets and evade taxes.

Washington's case against UBS, the world's second-largest wealth manager, had strained relations between the United States and Switzerland because it challenged the latter's jealously guarded bank secrecy laws.

The case therefore has big implications not just for Switzerland, whose private banks manage around $2 trillion of foreign wealth, but for the entire offshore banking industry.

At a roughly three-minute hearing before U.S. District Judge Alan Gold in Miami, U.S. Department of Justice tax lawyer Stuart Gibson said the government would drop the case against UBS once a final settlement was in place.

"The parties have initialed agreements," Gibson said. "It will take a little time for the agreements to be signed in final form."

The U.S. government and UBS had reached a settlement in principle on July 31. Subsequent talks focused on how to transfer client data to Washington while respecting Swiss bank secrecy laws.

U.S. authorities had been seeking the names of 52,000 wealthy American clients suspected of trying to evade taxes.

The authorities believe many of the clients either inherited substantial wealth and have European roots, are frequent business travelers who receive offshore compensation via Swiss accounts, or intended their accounts from the start as a means to avoid U.S. taxes.

But UBS, backed by the Swiss government, held onto the data, calling the U.S. demand a fishing expedition that would breach Swiss laws and bilateral tax agreements.

In February, UBS had agreed to pay $780 million to settle criminal charges it had faced in a similar tax dispute with the U.S. government.

It agreed to hand over data related to about 250 U.S. clients who held secret accounts, and promised to close its offshore business to U.S. clients.

Swiss bank secrecy rules have eroded in recent years, and in March the government made concessions to abandon the distinction between tax fraud and tax evasion when dealing with foreign authorities.

UBS (UBS) shares were up 1% at 16.01 Swiss francs in afternoon trading in Switzerland. In the United States, they were up 1% at $14.87 in morning trading. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
Some Converse copycats cost big bucks A few bargain brands got swept up in Chuck Taylor's net, but others cost a pretty penny. More
Urban infrastructure gets a second life Railroad beds become parks, power plants become aquariums and slaughterhouses are now art centers as an industrial past turns people-centric. More
Boomtown moms From working mothers raising their kids in RVs to stay-at-home moms who spend their days organizing events for the Oil Wives club, meet the moms of North Dakota's oil boom. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Copyright 2009 Reuters All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.