Senior executives at Swiss bank UBS knew at least three years ago that the firm was in violation of U.S. securities laws. Internal letters uncovered that the firm violated U.S. law in dealings with its American clients, according to The New York Times.
UBS is currently being investigated into whether it violated securities and tax laws by helping wealthy Americans hide money overseas. The letters now show that the bank ignored early warning signs of violations.
Marcel Rohner, who was head of the bank’s global wealth management unit and has been CEO since 2007, Peter Kurer, the bank’s former top lawyer who now serves as chairman, and several in-house lawyers and compliance officers are also under scrutiny, according to the NYTimes.
Four letters were disclosed by people and indicate that top UBS executives were first alerted to potential problems as early as June 2005. The U.S. Justice Department formally announced in May 2008, its investigation of the bank.
A letter seen by the Financial Times shows that in May 2006, written by Kurer and copied to Marcel Rohner and Lawerence Weinback, a UBS director who now sits on the company’s audit committee, inquires about whether the bank helped its wealthy American clients evade taxes. The letter was written to Bradley Birkenfeld, a former UBS banker.
Birkenfeld admitted earlier in 2008 to helping a billionaire U.S. businessman evade millions in taxes while at UBS. In the letter, Kurer acknowledged that he had received information from a whistleblower that resulted in an internal investigation. UBS interviewed 12 of its private bankers, according to FT.
“I thank you for drawing my attention to this compliance issue,” Kurer wrote. He added that in keeping with bank policy, the whistleblower “must not fear any retaliation,” according to FT.
Despite Kurer advising that bankers face a strenuous approval process, bankers remained under immense pressure to acquire new clients. They were encouraged to travel to the U.S. at least four times a year to take clients out informally to plays and sporting events to retain and potentially meet new clients, according to FT.
UBS closed its offshore banking business for U.S. clients back in November 2007 due to the tougher regulation environment.