Business
France's Highest Court Orders Retrial on $2 Billion UBS Fine
France's Supreme Court Orders New Trial Over UBS's $1.95 Billion Fine.
France's highest court has ruled that a fresh trial should be conducted to reassess the 1.8 billion-euro ($1.95 billion) fine imposed on UBS (UBSG.S) for its involvement in illegal banking services and money laundering in the country. While the court upheld the guilty verdict against the bank, it specified that the new trial would take place at the Paris appeals court to determine a revised fine, if any.
This decision overturns and annuls the previous judgment of the Paris Court of Appeal from December 13, 2021, specifically regarding penalties and civil interests. UBS's shares initially rose by as much as 3% upon hearing that the 1.8 billion-euro fine was invalidated, but later erased those gains to settle around a 1.6% increase.
The Cour de Cassation's ruling solidifies the guilty verdict against UBS, and the need for a new trial on penalties arises due to procedural lapses in the prior decision on the fine. UBS expressed disappointment in the court's decision but reiterated its commitment to defending itself in the upcoming trial, maintaining that it adhered to all applicable laws and regulations.
This latest development extends the uncertainty surrounding the fine for UBS, as it continues to contest the verdict and penalty related to allegations of enticing wealthy French clients to conceal undeclared funds in Swiss bank accounts between 2004 and 2012.
The legal saga, spanning over a decade, has involved intense scrutiny of the bank's representatives by French judges. The 1.8 billion-euro fine imposed on UBS two years ago was a reduction from the initial penalty of 4.5 billion after the first trial in 2019. The fine includes a 1 billion-euro penalty and 800 million euros in damages payable to the French state.
UBS had set aside over $4 billion in provisions for litigation and regulatory matters, with an estimated 1.1 billion euros allocated for the financial implications of the French case alone. The Supreme Court's review focused on the adherence to legal procedures by the Paris appeals court, not the underlying facts of the case.
UBS remains entangled in various legal and regulatory matters, including issues related to the sale of mortgages and residential mortgage-backed securities in the United States. The bank has also inherited cases from Credit Suisse and has settled some, such as the decade-old $1.5 billion-plus "tuna bond" scandal with Mozambique.
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