UBS Group AG UBS is on the verge of a settlement with the U.S. government that could include hundreds of millions of dollars in fines. This was reported by the Wall Street Journal (“WSJ”). The penalties are related to tax evasion at Credit Suisse, which UBS acquired after the bank collapsed in 2023.
Per the WSJ report, the potential settlement with the U.S. Justice Department could come as soon as this week. It follows a 2014 plea agreement wherein Credit Suisse admitted to helping wealthy Americans avoid paying taxes.
Details of UBS Settlement Over Tax Evasion
According to a WSJ report, the bank has been questioned by the Justice Department on hundreds of millions of dollars in accounts that were closed shortly after the plea agreement but were never disclosed to the U.S. authorities. This meant that some American Credit Suisse account holders were able to transfer their funds to other tax havens before the government discovered them.
According to a Senate investigation conducted in 2023, the bank probably concealed hundreds of millions of dollars in accounts after the plea agreement and failed to disclose the accounts to U.S. regulators until they were brought to light by whistleblowers.
UBS set aside almost $4 billion when it acquired Credit Suisse to handle ongoing investigations and litigation, and its 2014 plea agreement included $2.6 billion in fines.
UBS’s Prior Legal Issues
Legal issues and operational difficulties plague UBS Group. The firm settled a lengthy civil dispute against it in August 2023 by paying the U.S. Department of Justice a $1.44-billion civil penalty. Allegations of malfeasance about the underwriting, issuance and sale of residential mortgage-backed securities issued in 2006-2007 were made in the complaint, which was filed in 2018.
Since Credit Suisse was acquired, it has been facing class action lawsuits and grievances from former Credit Suisse workers and individual stockholders regarding insufficient consideration. It is anticipated that these ongoing legal actions will raise expenses, which will have a negative effect on the business's profitability.
UBS Group’s Zacks Rank & Price Performance
UBS shares have gained 4.6% on the NYSE over the past six months compared with the industry’s growth of 4.9%.
Image Source: Zacks Investment Research
UBS Group carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Legal Issues Faced by Other Banks
In December 2024, Deutsche Bank’s DB broker-dealer subsidiary, Deutsche Bank Securities Inc., was hit with a $4-million penalty by the Securities and Exchange Commission.
The fine was levied due to DB’s failure to promptly file certain Suspicious Activity Reports as mandated by the Bank Secrecy Act. These rules are issued by the U.S. Department of the Treasury's Financial Crimes Enforcement Network.
In the same month, HSBC Holdings plc’s HSBC Australia unit, HSBC Bank Australia, was sued by the Australian Securities and Investments Commission (“ASIC”) for failing to protect its customers from losing millions of dollars in scams.
According to ASIC’s report from Dec. 16, 2024, HSBC received approximately 950 reports of fraudulent transactions between January 2020 and August 2024, which resulted in a total loss of around A$23 million ($14.6 million) for its customers. Of this total amount, almost A$16 million ($10.2 million) was lost between October 2023 and March 2024.
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