UBS (UBSG.S) was found guilty of promoting illicit financial services and money laundering in France, which resulted in a punishment of 1.8 billion euros ($1.95 billion). On Wednesday, the highest court in France determined that there should be a new trial over this matter.
The court, which also confirmed the guilty decision against the bank, stated that a fresh trial would need to occur at the Paris appeals court to assess if there should be a new fine.
The order overturns and nullifies the Paris Court of Appeal decision on December 13, 2021, but only when it comes to fines and civil interests. The court clarified that all other parts of the decision would remain in place.
Following the announcement that the 1.8 billion euro punishment had been overturned, UBS’s share price continued its upward trend, reaching a high of up to 3% higher than before. After that, however, they could only maintain a gain of about 1.6% after erasing all their previous gains and then some.
The Cour de Cassation, France’s highest court, made a decision that resulted in the finding of guilt against UBS. The court determined that a new trial on the penalties was necessary since the earlier judgment about the fine did not follow all of the correct legal procedures that were necessary.
UBS expressed dissatisfaction with the court’s decision to uphold the overall conviction against it. The company added that it would continue to assert that it behaved in line with all applicable rules and regulations and would defend itself in the subsequent trial.
The Swiss bank wanted to reverse the decision and penalty for wooing wealthy French clients into hiding undeclared cash in Swiss bank accounts between 2004 and 2012. The ruling once again extended the uncertainty about the fine for the Swiss bank, which sought to overturn the verdict and penalty.
Before the verdict was handed down, Keefe, Bruyette, and Woods stated in a note to their clientele that “UBS may be able to partially reduce the 1.1 billion euros of provisions currently set aside (for the case).”
“However, we would caveat that a new trial may lead to a final settlement above or below the 1.8 billion euros,” adding that it anticipated the matter to take “multiple years” to conclude.
The legal dispute has been ongoing for more than ten years, and during that time, French courts have questioned a number of bank employees.
The original aggregate penalty of 4.5 billion euros levied on the bank following the conclusion of a first trial in 2019 was less than half of the 1.8 billion euro punishment assessed against UBS in France two years prior.
It consists of a penalty of one billion euros and damages owing to the state of France for eight hundred million euros.
In its financial results for the third quarter, UBS stated that it had set aside over $4 billion in provisions for litigation and regulatory concerns; almost half of these provisions were for Credit Suisse. It was projected that the financial repercussions of only the French case would amount to 1.1 billion euros.
The facts upon which the Paris appeals court’s decision was based were not subject to the scrutiny of France’s highest court; instead, the court looked at whether or not the verdict had adhered to the law.
UBS is still engaged in several legal disputes and regulatory investigations, including accusations concerning the distribution of mortgages and residential mortgage-backed securities in the United States.
When it formally took over from its previous competitor, Credit Suisse, it also absorbed several lawsuits from that company. It has already settled a number of those cases, such as the one with Mozambique about the decade-old “tuna bond” fraud that involved more than $1.5 billion.