According to media reports, a group of tax activists is seeking to block UBS from continuing its business with US pension funds. The bank is currently trying to extend an existing exemption but legacy issues from Credit Suisse could further complicate the situation.

In the US, financial institutions are prohibited from managing U.S. pension funds if they have been convicted of criminal offenses or sanctioned by regulatory authorities. The US Department of Labor (DOL) previously granted individual exemptions, known as Prohibited Transaction Exemptions (PTE), to certain individuals at UBS and Credit Suisse (CS). Following UBS's acquisition of Credit Suisse, these exemptions were extended for one year.

However, UBS' request for another renewal now faces resistance. According to a report by the «Süddeutsche Zeitung», a group of tax activists is urging the authorities to reject the extension.

James Henry, a representative of the six-member activist group, told the newspaper that there is suspicion the bank’s structures enable criminal behavior. Henry, who previously published reports on tax havens for the non-governmental organization Tax Justice Network, pointed out that UBS has paid around $20 billion in fines for nearly 100 offenses between 2000 and 2023. Despite these fines, banks often do not feel the consequences of their actions.

Deliberate and Profitable

«Criminal transactions are desirable because they are lucrative, they generate more money than the penalties cost, and none of those responsible has to go to prison,» said Henry.

He referenced several examples, including the legal proceedings in France over recruiting wealthy French clients and the Libor scandal. A more detailed list can be found in the documents from the Department of Labor’s Employee Benefits Security Administration.

Misconduct by Individual Employees

According to the report, UBS has submitted a 500-page application to the DOL requesting the exemption. The bank’s lawyers argue that the issues were caused by misconduct from individual employees.

«We have filed our application and are expecting a decision soon,» a UBS spokesperson told «Reuters» in response to the article.

Credit Suisse’s Legal Legacy

Following the acquisition of Credit Suisse, UBS has inherited its ongoing legal cases. In this context, the so-called «Bulgaria Connection» case before the Federal Criminal Court in Bellinzona adds a sensitive dimension. In 2022, Credit Suisse was found criminally liable for organizational deficiencies, marking the first time a company, rather than just its employees, had been convicted.

Given this backdrop, UBS continues to pursue all legal avenues to overturn this ruling.