According to a UBS statement of July 31, the U.S. Government has informed the Court in the John Doe Summons case – which concerns private client information and taxation — that the parties have reached an agreement in principle on the major issues and expect to resolve the remaining issues in the coming week.
A status conference among the parties has been set for August 7.
In mid-July, the U.S. government and UBS, supported by the Swiss government, agreed to negotiations for the purpose of resolving the John Doe summons litigation, which is related to tax evasion and client information.
“UBS welcomes the announcement…” the company says in an earlier statement.
In June, the U.S. Justice Department said it would not drop a case seeking the names of 52,000 U.S. clients who may have used the bank to hide some $15 billion in assets from the Internal Revenue Service, but it also indicated that it was open to considering a settlement.
Tax issues have been complicating some expected changes to the U.S. wealth-management division of UBS, according to the Financial Times. The newspaper claims that some former top wirehouse executives, such as Bob McCann (previously with Merrill Lynch) and Sallie Krawcheck (earlier with Citigroup/Smith Barney) have been approached by UBS about working for its U.S. operations.
UBS has not commented on its future plans, but industry consultant Chip Roame speculates that its U.S. wealth operations have been in a bit of an awkward position when it comes to attracting top talent. “Because of the uncertainty involving UBS —- related to the big tax case and rumors of a possible spin-off of its Paine Webber operations — you haven’t seen gainfully employed executives going there, especially those who are happy with their current roles at wirehouses now facing less uncertainty,” says Roame, head of Tiburon Strategic Advisors in Northern California.
But with UBS and U.S. authorities looking somewhat likely to reach a settlement, “One mystery has been solved,” Roame explains. With many former Wall Street executives available at present, “the right contract could go a long way.” And the presence of a veteran broker-dealer manager, like McCann or Krawcheck, could help UBS grow its business and even better position the firm for a future spin-off.