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July 25, 2008 5:54:57 PM CDT

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Feds Detain Top UBS Banker in Tax-Fraud Probe

Posted May 7, 08 6:25 AM CDT in Business 

(Newser) – Already reeling from record losses and preparing to cut 5,500 jobs, UBS has acknowledged the Department of Justice is investigating the mega-bank for helping its wealthiest clients evade taxes. The feds "briefly detained" one of the Swiss firm's most senior private bankers as a "material witness," UBS said. Insiders told the Financial Times that the DoJ held the employee to encourage the bank to come clean.

Although the banker in question has not been charged, he will remain in the United States to aid the DoJ's investigation into tax evasion by its highest net worth clients. UBS is facing a similar probe in Germany, and on top of all that, the SEC has launched an inquiry into irregular cross-border activity. "Clients may run away if they think they'll leak information to tax authorities in Germany and the US," said one banker.

Sources Financial Times (UK), Bloomberg

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A woman leaves a UBS office Tuesday, May 6, 2008, in New York. The Swiss bank announced Tuesday it would cut 5,500 jobs and reported a net loss of $11 billion for the first quarter of this year. The first-quarter...   (AP Photo/Mark Lennihan)
A woman leaves a UBS office Tuesday, May 6, 2008, in New York. The Swiss bank announced Tuesday it would cut 5,500 jobs and reported a net loss of $11 billion for the first quarter of this year. The first-quarter...   (AP Photo/Mark Lennihan)
A Jan. 30, 2008 file photo shows the logo of Swiss Bank UBS in Zurich, Switzerland. Swiss bank UBS AG reported a net loss Tuesday, May 6, 2008 of 11.5 billion Swiss francs (US$10.97 billion; euro 7.1...   (AP Photo/Keystone, Walter Bieri, File)
In this file photo from Feb. 27, 2008, UBS share holders arrive for the Swiss Bank's extraordinary general assembly in Basel. Outgoing UBS AG chairman Marcel Ospel said Wednesday, April 23, 2008, that...   (AP Photo)
The logo of Swiss Bank UBS on Zurich's Bahnhofstrasse, Switzerland, in this Jan. 30, 2008 file photo.   (AP Photo/Keystone, Walter Bieri, file)
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