April 1, 2009
• Posted in

UBS Stock Value Plummeted Due To International Tax Evasion Scheme, Alleged Securities Fraud.

Oregon State Treasurer Ben Westlund and Attorney General John Kroger announced Wednesday that the State is seeking to recover over $25 million from Swiss Bank UBS AG that was lost to the Oregon Public Employees’ Retirement Fund.

The motion, filed Tuesday in New York, seeks to make Oregon a co-lead plaintiff in an existing securities fraud class action case against the world’s largest private bank, which is headquartered in Zurich.

The value of UBS stock fell sharply after the disclosure that executives masterminded an international tax evasion scheme. The lawsuit also alleges that UBS did not truthfully disclose its participation and exposure to the risk-laden U.S. subprime mortgage markets, and fraudulently marketed debt instruments known as auction-rate securities.

Those decisions directly hurt Oregonians and the state’s public employee retirement fund, the State alleges.

“Oregonians and our state’s future have been harmed by these bad deeds, and it demands decisive action,” Treasurer Westlund said. “We will not stand idly by and allow Oregonians’ money to be vaporized by bad actors in international banks.”

The motion was filed in the U.S. District Court for the Southern District of New York, by the Oregon Department of Justice on behalf of the State of Oregon, the Office of the State Treasurer and the Oregon Public Employees Retirement Fund.

“UBS engaged in a massive scheme to help wealthy clients evade their taxes,” said Attorney General Kroger. “We intend to hold UBS accountable for their illegal and unethical conduct.”

An analysis found that, from February 13, 2006 to Jan. 26, 2009, the state lost in excess of $25 million because of stock declines as the public became aware of the company’s fraudulent actions.

UBS stock traded above $66 in mid-2007, but that price began falling when the extent of UBS failure to adhere to ethical standards was disclosed, starting in 2008, the complaint alleges. The trading price was $12.26 on Jan. 26, 2009 – a loss of more than 60 percent.

In a blockbuster settlement in February, UBS admitted its role in a tax evasion scheme and agreed to pay $780 million to settle charges. The scheme funneled assets from thousands of wealthy Americans out of the country. In one case, UBS employees smuggled diamonds in a toothpaste tube, according to court documents.

The Internal Revenue Service is trying to force the disclosure of the names of as many as 52,000 wealthy American clients who may have evaded taxes by hiding money overseas.

The securities fraud class action cases Oregon seeks to join as co-lead plaintiff are In re UBS AG Securities Litigation and a similar case New Orleans Public Employees Retirement System v UBS AG et al.


Tony Green, (503) 378-6002 |

James Sinks, Office of the State Treasurer 503-508-0737 or |