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.