France's highest judicial court has ruled that a new trial should be conducted regarding the €1.8 billion ($1.95 billion) fine imposed on UBS for promoting illegal banking services and money laundering in the country. The court upheld the guilty verdict against the bank but mandated a retrial to determine a new fine, if any. The decision reverses the previous ruling by the Paris Court of Appeal from December 13, 2021, specifically in relation to penalties and civil interests. UBS's shares initially rose 3% on the news of the fine being struck down but later erased those gains to stand up around 1.6%.
The Cour de Cassation's decision finalizes the guilty verdict against UBS, but a new trial is required due to procedural issues in the determination of the initial fine. UBS expressed disappointment with the overall verdict but maintained its stance that it acted in accordance with all applicable laws and regulations. The legal uncertainty continues for the Swiss bank, which sought to overturn the verdict related to allegations of enticing wealthy French clients to hide undeclared funds in Swiss bank accounts between 2004 and 2012.
The initial €1.8 billion fine, imposed two years ago, was less than half of the original penalty of €4.5 billion after the first trial in 2019. The fine comprises a €1 billion penalty and €800 million in damages owed 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 French case alone. Analysts anticipate that the retrial may lead to a final settlement above or below the initial €1.8 billion, and the case is expected to extend over multiple years.
The decade-long legal saga involved UBS representatives facing scrutiny by French judges. Despite the retrial, UBS remains embroiled in various litigation and regulatory matters, including claims related to the sale of mortgages and residential mortgage-backed securities in the United States. The bank has also inherited cases from Credit Suisse, settling some, such as the Mozambique "tuna bond" scandal.
The legal developments underscore the challenges faced by UBS in navigating complex international regulatory landscapes and the prolonged nature of legal proceedings in financial misconduct cases.
By fLEXI tEAM
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