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Reuters – UBS has named Alastair Sclater to the new post of head of its Singapore prime brokerage, as the Swiss bank aims to build that business in Asia’s second-biggest centre for hedge funds.
Singapore, which competes with rival Asian financial centre Hong Kong, has attracted asset managers, private banks and hedge funds in recent years with tax incentives and strict secrecy rules.
The city-state also provides investors the opportunity to manage part of the more than $300 billion in assets held by its sovereign wealth funds GIC and Temasek.
Bloomberg – Credit Suisse Group AG, the largest Swiss bank by market value, hired Trevor Randolph from BNP Paribas Securities as a senior sales executive for its fund- linked products unit, a person familiar with the matter said.
Randolph, 36, will be a director and report to Jeff Jaenicke and Walter Rotondo, global head of fund-linked products at the Zurich-based company, said the person, who declined to be identified because the hire hasn’t been announced.
Kare11.com – An Illinois hedge fund manager who claimed to be the biggest victim of Minnesota businessman Tom Petters’ alleged Ponzi scheme was actually a participant in it, the Securities and Exchange Commission says.
Greg Bell and his company, Lancelot Investment Management, were charged with fraud Friday. The SEC said it also moved to freeze his assets, which include millions of dollars in Swiss bank accounts.
Ron Peterson, a court-appointed trustee for Lancelot’s investors, told the Star Tribune that Bell was arrested Friday in Highland Park, Ill., and was taken to the Anoka County jail in Minnesota.
Reuters – Hedge fund assets will continue to shrink this year, falling as much as two-thirds from their 2007 peak, but investors will return and assets will rebound when the economy revives, Alex Ehrlich, global head of prime services at Swiss bank UBS, said on Monday.
Last year was the hedge fund industry’s worst ever, as asset values plunged and investors pulled out record amounts of cash. These trends, which forced hundreds of funds to close their doors and some to impose redemption curbs, are likely to continue this year before the industry rebounds, Ehrlich said at the Reuters Private Equity and Hedge Funds Summit in New York.
"All this proves is that the hedge fund industry is cyclical," he said. "But the idea of the death of the hedge fund industry is crazy. The industry will rebound, though it will not rebound to peak levels."
Ehrlich, who runs one of the world’s largest prime brokerages, said that in just the past year hedge fund assets have fallen from roughly $2 trillion to as low as $1 trillion.
Breitbart.com – Banking giant UBS Wednesday defied pressure to name about 50,000 Americans holding secret bank accounts in Switzerland as the nation’s financial culture came under a withering fire.
US senators accused bankers at crisis-wracked UBS of helping wealthy Americans to flout US tax law through a variety of underhand methods down to encrypted laptops and lies to US customs officers.
But while acknowledging wrongdoing under a deal last month between UBS and US prosecutors, a top executive with Switzerland’s biggest bank said it could provide no more than 250-300 names of US account holders already handed over.
Mark Branson, the Zurich-based chief financial officer of UBS Global Wealth Management and Swiss Bank, said the group was already shutting down US-owned securities accounts and paying a 780-million-dollar fine to the US government.
"We believe that UBS has now complied with the summons to the fullest extent possible without submitting its employees to criminal prosecution in Switzerland," he told a hearing of the Senate investigations subcommittee.
Grilled by the panel’s Democratic chairman, Carl Levin, Branson said up to 48,000 accounts were held in Switzerland by US clients but that Swiss law precluded UBS from divulging any more names.
But Levin, accusing the British-born banker of being "needlessly evasive," said UBS had made a "declaration of war… against honest, hard-working taxpayers" through its illegal practices in the United States.
Broadening the fight to take in the Swiss government’s jealous protection of its banking secrecy law, the senator said: "We’re determined to fight back and end the abuses inflicted on us by those tax havens."
Under its settlement with the US Justice Department, UBS last month admitted to tax fraud by inviting rich US clients to open accounts in Switzerland and so evade declaring their income to the Internal Revenue Service.
Under its interpretation of the two nations’ tax treaty, UBS said it could only cough up the identities of 250 to 300 US account holders.
New York (HedgeCo.Net) – UBS may have until July 13 to “vigorously contest” the demands of the Internal Revenue Service to disclose the names associated with 52,000 offshore bank accounts, but the vice that the troubled Swiss bank is finding themselves in is getting tighter by the day. Tales of tax evasion, secrecy, greed, and diamonds smuggled in toothpaste tubes have garnered international interest, casting a blinding light of transparency on a bank that has helped thousands of wealthy Americans hide almost $15 billion from the U.S. government in recent years.
The wrath of the U.S. justice system doesn’t just stop at the bank. The wealthy individuals behind those targeted accounts are in danger of facing penalties, back taxes, even prison terms for their role in shielding their assets. And the UBS employees who catered to their client’s demands while showing them step by step how to hide their money and evade U.S. taxes? They will no doubt face prosecution, a fate that UBS is well aware of. And while UBS may uphold that their employees were acting in good faith, plenty of facts show otherwise.
“In my opinion, [the UBS employees] not only knew what they were doing was wrong, they were participating in the kind of international activities that you would only see in James Bond movies,” says Ken Rubinstein, Partner at New York City law firm Rubinstein & Rubinstein.
According to a complaint filed by the SEC, these UBS employees often traveled to the United States with encrypted laptops after having received training on how to avoid detection by U.S. authorities. These advisors then whisked their clients away to exclusive events such as art shows, yacht outings and sporting events, all funded by UBS.
Helping to kick-start the investigation was former UBS employee Bradley Birkenfeld, who pled guilty last year to charges of conspiracy and admitted to helping hide $200 million worth of client assets with the goal of avoiding taxes. Birkenfeld even disclosed he purchased diamonds for an American client – and smuggled them out of the country via a toothpaste tube.
The Defense
While the U.S. asserts they are entitled to these coveted names, UBS knows that the disclosure would no doubt end in their demise.
"Swiss law strictly prohibits UBS and its employees from disclosing to the IRS the account information located in Switzerland that the IRS seeks,” UBS lawyers have said recently.
However, this “Swiss law” defense that UBS is spouting will not hold up in court, says Rubinstein, referring to the Mutual Legal Assistance Treaty that has been in place with Switzerland since 1977.
The Mutual Legal Assistance Treaty is an agreement that the United States has with countries all over the world, which enables the U.S. government to obtain information in foreign countries should there be any suspicions of tax fraud or shady activity.
These treaties give the United States power to summon witnesses, obtain documents and other real evidence, issue search warrants and to serve process. A treaty will trump any internal laws of a specific country, therefore making the bank’s claim to Swiss secrecy rights obsolete.
The U.S. has also asserted that Switzerland was fully aware that what they were doing was illegal, despite any references to Swiss law, another fact that Rubinstein agrees with.
“UBS made a conscious decision that they could make more money by being international investment bankers, primarily focused in the US, than they could by being the traditional Swiss private bank to wealthy individuals,” he explains. “They understood that the minute they held that presence in the U.S., they would be compromising the secrecy that a Swiss private bank normally has.”
What’s at Stake
“Secrecy laws are not designed to protect criminals and allow them to hide their money,” Rubinstein explains. “They are designed to provide the individual privacy and protection from other individuals and companies, not from the government.”
It is because of this fact that secrecy laws will continue to be upheld in foreign countries, though not for the purpose of avoiding taxes. The treaties were enacted so the U.S. could easily probe into any suspicions regarding possible fraud.
To this date, there are only a handful of countries that do not have a treaty with the United States; mainly Cuba and Monaco.
UBS knows that if they’re forced to disclose those names, they can say goodbye to their U.S. clientele. If a judge rules against them, and they refuse to give up the information, they can be held in contempt of court, with the possibility that all of their U.S. assets would be frozen; a scenario that would essentially bankrupt the company.
UBS has already conceded to pay $780 million to the U.S. government in connection with criminal charges and has agreed to exit the cross-border business. Shares of UBS closed yesterday at $8.34, after hitting an all-time low last month of $8.08, down 76 percent from last year’s peak.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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New York (HedgeCo.Net) – A federal judge has set a July 13 hearing for UBS, in which they may be forced to disclose names associated with 52,000 secret Swiss bank accounts holding more than $14.8 billion in assets. UBS continues to assert that by providing these names, they are compromising overseas privacy laws as well as the reputation of the bank.
”Such violations would expose these employees to substantial prison terms, as well as fines, penalties and other sanctions,” UBS said in a court filing last week. “There is simply no reason to have, nor equity in having, such an expedited process here.”
UBS is feeling the heat from a surge of international pressure to crack down on secret tax havens sought by the wealthy. Estimating the U.S. loses $100 billion a year from offshore tax abuse, President Obama is at the forefront of the campaign to get tough on tax evasion.
While his Stop Tax Haven Abuse Act was aimed at secret financial centers in the Caribbean, Switzerland has long been regarded as a popular place to stash assets without the watchful eye of Uncle Sam to worry about. Switzerland does not believe that tax evasion is a crime.
UBS has already agreed to pay the U.S. $780 million in damages, with $200 million of that going to settle charges brought on by the Securities and Exchange Commission. They have also agreed to exit the U.S. cross-border banking business and close the existing offshore accounts of their American clients.
Offshore banking has also been cast in a bad light thanks to the recent Antigua-based scandal masterminded by Texas financier Robert Allen Stanford. Stanford’s companies, including Stanford International Bank, are estimated to make up about 10% of the country’s economy with billions in deposits coming from all over the world.
In 1999, the U.S. blacklisted Antigua, accusing the country of lax regulation and subpar anti-money laundering laws. The sanctions were lifted in 2001. Still, deposits in the region continued to soar, and the country insists that their regulatory system is strong. Antigua is currently conducting their own investigation in the Stanford matters.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
West Palm Beach (HedgeCo.net) – Swiss bank UBS AG’s money manager, Luxalpha, was one of the main European hedge funds that gave money to US money manager Bernard Madoff, it is now being shut down by CSSF, Luxembourg’s financial supervisors.
The Luxalpha assets were frozen in January, in what appears to be the first court action in Europe. Another private investor in a second UBS-run feeder fund, Luxembourg Investment Fund-US Equity Plus, is also considering legal action against the Swiss bank.
People with knowledge of the situation claimed that the two Luxembourg funds were not actively marketed by the bank and were set up at the request of clients to send money to Madoff. One of the Luxalpha board members, Rene-Thierry Magon de la Villehuchet, committed suicide in December after loosing $1.4 billion in his Madoff investments.
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Bloomberg – Banque Safdie SA, the Geneva-based wealth manager that withdrew money invested with Bernard Madoff three years before his alleged Ponzi scheme unraveled, said the scandal will mean more hedge fund regulation.
“What Madoff has done is highlight the lack of regulation,” Safdie Chief Executive Officer Claude Le Ber said in an interview from Geneva this week. “There’s going to be a shake out. Even before Madoff, the hedge fund industry was seeing redemptions and wasn’t producing absolute returns.”
Reuters – British fund manager GAM on Wednesday said it had moved to restrict investor redemptions to once a quarter rather than once a month in its funds of hedge funds amid turmoil in the industry.
A spokeswoman for GAM, which is owned by Swiss bank Julius Baer, confirmed the move after an earlier report in the Financial Times.
GAM which runs long-only and hedge funds has seen assets under management decline by about a third this year.
