UBS New York headquarters

Update 2  Florida, USA; Bern and Zurich, Switzerland (GenevaLunch) – The bell hasn’t yet quite tolled for anyone in the US court case where the IRS is asking for names of UBS bank clients. Judge Alan Gold in Miami late Friday 7 August, Swiss time, gave the two governments another week, until 12 August and at their request, to hammer out details of an out of court settlement.

Reactions were mixed, with the Financial Times reporting that “Friday’s setback caused confusion” for investors, arguing that the “failure” to reach an agreement will hurt UBS shares. Swiss media were more phlegmatic, viewing the delay as an acceptance that a resolution of  several technical issues requires more time, which the judge has given.

The IRS, the US tax collection authority, took UBS, Switzerland’s largest bank with operations spanning the globe, to court in an effort to force it to reveal the names of 52,000 clients it suspected had illegally opened accounts with UBS without filing US tax declarations.

In late April 2009 the Swiss government filed an amicus curiae, friend of the court, brief with the court in Miami, asking the court to consider that under Swiss law, UBS cannot be obliged to reveal the names of its clients, except in certain cases. Since then, the two governments have been in talks to find an out of court settlement. The presiding judge in the case, Alan Gold, Friday 31 July asked lawyers for both sides to give him a 7 August update of their dealings in the so-called status calls.

A week ago, the two governments signaled that they had reached an Agreement in Principle which halted court proceedings, although the details of the agreement have yet to be negotiated and made public.

Speculation has surrounded the possibility of UBS just having to pay a fine, although many commentators agree that it is more likely that UBS will have to hand over some of the names of its US clients.

Background:

• Switzerland asks US to stop IRS request for UBS names“, 1 May 2009, GenevaLunch
• “US takes Swiss bank UBS to court for 52,000 more names“, 20 February 2009, GenevaLunch

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