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The Morning Risk Report: UBS Is Fined $4.2 Billion in French Tax-Evasion Case |
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Judges in Paris found UBS guilty of illegally recruiting clients in France and helping them to launder money. PHOTO: FABRICE COFFRINI/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Hello. French judges ordered UBS Group AG to pay a record €3.7 billion ($4.2 billion) fine for helping wealthy clients in France evade taxes, as Switzerland’s largest bank struggles to turn the page on legal entanglements stemming from its core wealth-management business.
Judges in Paris found the Zurich-based bank guilty of illegally recruiting clients in France and helping them to launder money that wasn’t declared to French fiscal authorities. In handing down the largest-ever fine in France, the judges described the lender’s crimes as “exceptionally serious.”
“The conviction is not supported by any concrete evidence,” UBS said, adding that it planned to appeal the decision.
[Continued below...]
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The trial cast a spotlight on how UBS used its operations in France to identify clients interested in moving funds to Switzerland to avoid scrutiny from French tax authorities. UBS bankers in Switzerland used methods “worthy of James Bond,” prosecutors argued in court, to travel surreptitiously to France and meet with French clients at parties and other events organized by UBS bankers in France.
The ruling shows the risks UBS has taken by opting to duke it out in court with French and U.S. authorities. In the U.S., UBS is contesting charges from the Justice Department that it misled investors about the quality of billions of dollars in subprime and other mortgage loans that were sold in the run-up to the financial crisis more than a decade ago. In France, the government has vowed to crack down on tax evasion as part of its effort to quell anger among yellow-vest protesters over income inequality and the high cost of living.
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| From Risk & Compliance Journal |
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Shares of Swedbank tumbled more than 13% Wednesday in Swedish markets following a report alleging the bank handled billions in suspicious funds. PHOTO: INTS KALNINS/REUTERS
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Shares of Nordic lender Swedbank AB tumbled more than 13% in Swedish markets following a report alleging the bank handled billions in suspicious funds, some of which could be traced to a massive money-laundering scandal at Danske Bank A/S.
Swedbank executives held a special call with analysts to address the report. Birgitte Bonnesen, the bank’s chief executive and president, said the bank conducts in-depth reviews of any suspicious transactions it identifies and, where appropriate, reports them to the financial police.
“When we in Swedbank identify suspicious transactions, we take action,” she said, according to an S&P Capital IQ transcript of the call.
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U.S. Puts Sanctions on Suspected Drug-Trafficking Network |
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The U.S. Treasury Department placed sanctions on an alleged Indian drug trafficker who it said has laundered hundreds of millions of dollars in illicit proceeds.
Jasmeet Hakimzada runs a global drug-trafficking network that smuggles heroin, cocaine, ephedrine, ketamine and synthetic opioids into the U.S., Australia, New Zealand and the U.K., the Treasury said. The United Arab Emirates resident laundered the funds for a decade using an Emirates-based company, the Treasury said.
Neither he nor the company could be reached for comment. Mr. Hakimzada has also been charged in a 46-count indictment in Tennessee with drug trafficking and money laundering.
Also targeted on Wednesday with sanctions were his parents and three entities based in India. Mr. Hakimzada’s father, Harmohan, is his primary partner in the operation and his mother, Eljeet Kaur, serves as an officer in two front companies in India, the Treasury said. They couldn’t be reached.
—Samuel Rubenfeld
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Deutsche Bank towers in Frankfurt, Germany. MICHAEL PROBST/ASSOCIATED PRESS
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Deutsche Bank AG racked up a loss of $1.6 billion over nearly a decade on a complex municipal-bond investment that it bought in the runup to the 2008 financial crisis, and failed to confront head-on even as markets were upended and regulations tightened. The loss, which hasn’t previously been reported, represents one of Deutsche Bank’s largest ever from a single wager—roughly quadruple its entire 2018 profit—and ranks as one of the banking industry’s biggest soured bets in the last decade.
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The project includes the installation of 12,000 closed circuit TV cameras in Manila as well as President Duterte’s hometown of Davao. PHOTO: FRANCIS R. MALASIG/EPA/SHUTTERSTOCK
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U.S. pressure on Huawei Technologies Co. is echoing in the Philippines, where lawmakers are pushing back against a $400 million video surveillance project that would use gear supplied by the Chinese company.
The “Safe Philippines” deal—signed during Chinese President Xi Jinping’s visit to the country in November—calls for the installation of 12,000 closed circuit television cameras in the capital, Manila, and in President Rodrigo Duterte’s hometown of Davao. It is intended to help police respond faster to crimes, gather evidence and identify suspects using facial-recognition technology.
Congressional opponents in the Philippines worry the project could enable spying by Beijing, and they blocked its funding with a provision inserted into the country’s annual budget passed in early February.
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Columbia University in New York is reviewing its philanthropic relationship with the Sackler family, whose company produces the opioid OxyContin. PHOTO: EDUARDO MUNOZ/REUTERS
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The New York Academy of Sciences and Columbia University are joining the list of universities, museums and nonprofits reviewing philanthropic relationships with members of the Sackler family, owners of pain-pill maker Purdue Pharma LP. Activists have been putting pressure on institutions to stop accepting Sackler family donation money.
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Several companies including Nestlé SA and “Fortnite” maker Epic Games Inc. suspended advertising on YouTube Wednesday following a report documenting material on the video service that sexually exploits children. The withdrawals come after video blogger Matt Watson posted a video on YouTube on Sunday that showed inappropriate user comments about videos featuring underage girls.
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An open pit is seen at Glencore's Bulga Coal operations near Singleton, Australia. PHOTO: BRENDON THORNE/BLOOMBERG NEWS
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Lyft Inc. is preparing to list its shares on Nasdaq around the end of March, as the ride-sharing firm’s hotly anticipated plan to join the public markets comes into focus.
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Apple Inc., hoping to revitalize sales in China, has paired up with the world’s largest financial-technology company to give iPhone buyers an affordable purchase option: up to two years of interest-free financing.
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Silicon Valley startups are often eager to tout their soaring values. But they are far more pessimistic when they hand out stock before going public—a sleight of hand that creates a hidden future windfall for employees while potentially lowering their taxes.
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Warren Buffett is always on the hunt for “elephants,” as he calls large acquisitions. But three years have passed since he bagged a new one. One reason: The Omaha, Neb., billionaire faces unprecedented competition from private equity and other funds looking to make fast acquisitions, often at higher prices than Mr. Buffett is willing to pay.
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Heather Dixon, corporate controller and chief accounting officer of Aetna Inc. PHOTO: FINANCIAL EXECUTIVES INTERNATIONAL
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The role of the corporate controller, often the finance chief’s second-in-command, is expanding as CFOs delegate more of their traditional finance leadership work—a stressful evolution for some finance veterans who are stretching beyond their historic focus on process and efficiency.
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Junichiro Hironaka, the new defense lawyer for Carlos Ghosn, leaves a news briefing Feb. 20. PHOTO: KIYOSHI OTA/BLOOMBERG NEWS
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Carlos Ghosn’s new defense lawyer attacked Nissan Motor Co.’s handling of accusations against its former chairman, saying the company should have addressed the issue internally instead of bringing it to prosecutors. Mr. Ghosn replaced his initial defense lawyer after twice failing to win release on bail. He remains in a Tokyo jail three months after his arrest and has lost his executive titles at Nissan and alliance partner Renault SA.
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Activist investor Starboard Value LP is unhappy with Bristol-Myers Squibb Co.’s deal to buy rival Celgene Corp., and it moved to install its own set of directors at Bristol-Myers. The hedge fund has nominated five potential directors, including its chief executive, Jeffrey Smith, and has been meeting with the drugmaker’s executives, Bristol-Myers said.
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Barclays PLC sought to fend off an activist investor Thursday with plans to buy back shares and a strong message that its current strategy is working. Barclays’ investment bank, in the crosshairs of an activist campaign by New York investment firm Sherborne Investors, reported largely flat quarterly revenue across its divisions.
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