UBS Group AG UBS lodged an appeal with the Court of Cassation against the decision of the Court of Appeal. Last week, the court ordered the Swiss bank to pay a fine of 3.75 million euros for illegal solicitation and laundering of tax evasion proceeds from high net worth clients. The penalty has been reduced from the 2019 fine of 3.7 billion euros. In addition, the court had ordered the confiscation of one billion euros. Civil damages worth 800 million euros imposed on the Swiss company to be paid to the French state have remained intact since the 2019 ruling.
The appeal was filed within the legal time limit of five days to assert the rights of UBS Group. This enables the UBS Group to comprehensively assess the decision of the Court of Appeal and determine the next steps in the best interests of its stakeholders.
Around 450 million euros have already been set aside by the UBS Group as provisions for legal fines. She was also to post a bond of 1.1 billion euros.
UBS Group lawyers argued during the appeal trial that investigators had found no clear evidence of a systematic attempt by UBS Group business advisers to solicit French clients at client events, such as cocktails and cocktails. hunts. The bank also argued that the original fine was disproportionate.
The UBS Group was under investigation by French authorities into potential charges of illegally soliciting clients in France to open Swiss accounts for hiding undisclosed wealth between 2004 and 2012. Later, the investigation included money laundering charges against the bank. In 2019, following a seven-year investigation into these allegations and the abandonment of settlement negotiations, the bank was likely to counter the allegations of these illegal activities.
The accusation of money laundering underlies potential damage to the reputation of the UBS Group, which is one of the world’s largest wealth managers. The UBS Group operates in a complex, uncertain and subject to change business and regulatory environment. In addition, the UBS Group is subject to numerous regulations by US and non-US regulators which add complexity to ongoing global compliance operations.
We believe that the ongoing investigations of several banks will be a step forward in reducing the huge losses incurred due to overseas tax evasion. Regulatory authorities are investigating the scandals and are determined to deliver a landmark judgment to end these shrewd practices in the future, deliver justice to the victims, and punish the wrongdoers.
The ongoing investigations will undoubtedly tarnish the reputation of UBS Group on the world stage. Nonetheless, resolving these issues will likely restore investor confidence in the stock.
UBS Group shares have gained 10.5% on the NYSE in the past three months against a 1.6% decline recorded by the industry.
Image source: Zacks Investment Research
Currently, UBS Group holds a Zacks Rank # 2 (Buy). You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.
Several finance companies continue to face legal problems and are charged with huge sums of money for malpractice. Some of them are Franklin Resources, Inc. BEN, Washington Federal WAFD and Charles Schwab SCHW.
Last month, a lawsuit was filed against Franklin Resources by a group of investors claiming that BEN sabotaged a startup named Onsa to gain its technology and therefore entry into the burgeoning fintech market. Bloomberg reported this news.
Washington Federal has agreed to pay a civil fine of $ 2.5 million to the Office of the Comptroller of the Currency in connection with its February 2018 consent order for loopholes in the money laundering and banking secrecy law ( “AML / BSA”).
In April 2017, Washington Federal entered into an agreement to acquire Anchor Bancorp in an all-equity transaction. That year, in September, the companies changed the merger end date from December 31, 2017 to June 30, 2018, due to the identification of certain flaws in the procedures, systems and processes of the BSA program of Washington Federal. However, the agreement was terminated on July 17, 2018.
SCHW has been slapped with a class action lawsuit for breaching its fiduciary duty by putting its interests before protecting its clients through the cash-sweeping program of Schwab Intelligent Portfolios, the bank’s robotic advisor.
The case, filed in U.S. District Court in Northern California, also accused Charles Schwab of breach of contract and violation of state laws.
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