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UBS Group AG (UBS) to Fight for Reduction in $1.95B Penalty
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UBS Group AG (UBS - Free Report) has won a French top court ruling, per which the €1.8-billion ($1.95 billion) penalty levied on the bank related to its cross-border business activities could be reduced. However, the bank could not reverse the verdict with respect to the promotion of illegal banking services and money laundering activities in the country.
UBS was “disappointed that the French Supreme Court has confirmed the previous court decision regarding unlawful client solicitation”, while it was “pleased that the highest court in France agrees with its position on these important aspects of the legal case.”
The judges have ordered a fresh trial by a lower court of the country to recalculate the validity of the $1 billion confiscation order and the justification regarding €800 million of damages awarded to the state of France based on the new legal guidance.
Amid all this, UBS continues to admit that it acted in accordance with all applicable laws and regulations at all times. It also stated, “UBS will defend itself in the forthcoming trial.”
Regarding its cross-border business activities in France between 2004 and 2012, UBS was investigated in 2013 by the French authorities to assess its role in assisting the rich clients to avoid taxes. Further, in 2019, UBS was found guilty of “unlawful client solicitation and aggravated laundering of the proceeds of tax fraud”. Back then, UBS was ordered to pay €4.5 billion. However, UBS challenged the decision, and in 2021, the penalty was brought down to €1.8 billion. Also, the Supreme Court ruling ordered a reconsideration of the given penalty.
Apart from legacy legal cases, UBS has been facing legal hassles and operational challenges since its emergency takeover of Credit Suisse in March 2023. It has been facing challenges from individual shareholders and former employees of Credit Suisse. It witnessed a class action suit by the former shareholders of Credit Suisse, who had suffered damages due to an inappropriate exchange ratio.
UBS Group AG shares have rallied 30.3% on the NYSE over the past six months compared with the industry’s rise of 3.2%.
Citigroup Inc. (C - Free Report) will pay $25.9 million in fines and remedies for intentionally discriminating against Armenian Americans when they applied for credit cards, per the Consumer Financial Protection Bureau (“CFPB”).
The CFPB found that C employees were trained to avoid approving applications of Armenian Americans as they were more likely to commit fraud. Employees referred to applicants as “bad guys” or as affiliated with organized crime.
Capital One Financial Corporation (COF - Free Report) faced a lawsuit from savers who claimed that the bank used deceptive practices to make them think that they were earning the highest interest rate available from the company's online banking arm in the increasing rate environment.
The plaintiffs claim that COF misleadingly and fraudulently created a new high-yield account rather than increasing the rates on its 360 Savings account. In the high interest rate environment, COF’s existing 360 Savings account customers, who were seeking juicier yields, were required to open a 360 Performance Savings account.
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UBS Group AG (UBS) to Fight for Reduction in $1.95B Penalty
UBS Group AG (UBS - Free Report) has won a French top court ruling, per which the €1.8-billion ($1.95 billion) penalty levied on the bank related to its cross-border business activities could be reduced. However, the bank could not reverse the verdict with respect to the promotion of illegal banking services and money laundering activities in the country.
UBS was “disappointed that the French Supreme Court has confirmed the previous court decision regarding unlawful client solicitation”, while it was “pleased that the highest court in France agrees with its position on these important aspects of the legal case.”
The judges have ordered a fresh trial by a lower court of the country to recalculate the validity of the $1 billion confiscation order and the justification regarding €800 million of damages awarded to the state of France based on the new legal guidance.
Amid all this, UBS continues to admit that it acted in accordance with all applicable laws and regulations at all times. It also stated, “UBS will defend itself in the forthcoming trial.”
Regarding its cross-border business activities in France between 2004 and 2012, UBS was investigated in 2013 by the French authorities to assess its role in assisting the rich clients to avoid taxes. Further, in 2019, UBS was found guilty of “unlawful client solicitation and aggravated laundering of the proceeds of tax fraud”. Back then, UBS was ordered to pay €4.5 billion. However, UBS challenged the decision, and in 2021, the penalty was brought down to €1.8 billion. Also, the Supreme Court ruling ordered a reconsideration of the given penalty.
Apart from legacy legal cases, UBS has been facing legal hassles and operational challenges since its emergency takeover of Credit Suisse in March 2023. It has been facing challenges from individual shareholders and former employees of Credit Suisse. It witnessed a class action suit by the former shareholders of Credit Suisse, who had suffered damages due to an inappropriate exchange ratio.
UBS Group AG shares have rallied 30.3% on the NYSE over the past six months compared with the industry’s rise of 3.2%.
Image Source: Zacks Investment Research
UBS carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Misconduct by Other Companies
Citigroup Inc. (C - Free Report) will pay $25.9 million in fines and remedies for intentionally discriminating against Armenian Americans when they applied for credit cards, per the Consumer Financial Protection Bureau (“CFPB”).
The CFPB found that C employees were trained to avoid approving applications of Armenian Americans as they were more likely to commit fraud. Employees referred to applicants as “bad guys” or as affiliated with organized crime.
Capital One Financial Corporation (COF - Free Report) faced a lawsuit from savers who claimed that the bank used deceptive practices to make them think that they were earning the highest interest rate available from the company's online banking arm in the increasing rate environment.
The plaintiffs claim that COF misleadingly and fraudulently created a new high-yield account rather than increasing the rates on its 360 Savings account. In the high interest rate environment, COF’s existing 360 Savings account customers, who were seeking juicier yields, were required to open a 360 Performance Savings account.