Wednesday, November 19, 2008

Tax Cheating UBS Keeps Spot on Bush's SIPC

Swiss bank UBS illegally helped 19,000 wealthy Americans avoid $2.1 billion in taxes from 2000-2007. In 2005 an internal whistle blower wrote UBS executives and the bank's general counsel about the scheme. The New York Times reported:

Senior executives were alerted at least three years ago to possible violations of securities laws in dealings with American clients of its private bank. The letters cast a spotlight on the senior executives who were copied on them, including Marcel Rohner, who led the bank’s global wealth management unit and has been chief executive since 2007, and Peter Kurer, the bank’s former top lawyer, who is now its chairman.

Who did Marcel and Peter involve in their internal investigation? Did they inform Vice Chair Phil Gramm? Did either ask Mark S. Shelton for assistance?

Mark S. Shelton is managing director and general counsel, Wealth Management US, and co-global general counsel, Global Wealth Management & Business Banking, UBS. He joined UBS in May 2003 and is responsible for over 400 lawyers, compliance officers, and other professionals. The US Legal and Compliance Departments provide advice, surveillance, and training services, and act as control functions, for the Wealth Management businesses located in several broker-dealers, trust companies, UBS AG bank branches, and UBS Bank USA.

Mark S. Shelton was appointed to the Securities Investor Protection Corporation by President George W. Bush in 2007. Today, the President nominated him for reappointment as the Securities Industry Representative. What was Mr. Shelton's role in his firm's widespread tax cheating? Surely for symbolic reasons alone, George W. could have found another guardian.

The SIPC is charged with protecting investors. Their press release states:

The Securities Investor Protection Corporation is the investor's first line of defense in the event a brokerage firm fails owing customers cash and securities that are missing from customer accounts.

Who's looking out for the taxpayer, now a direct investor in financial firms through Hank Paulson's sovereign debt fund? UBS didn't care about wealthy clients paying their legal tax obligations for a seven year period. Why should I trust their representative to look after my interests?