Swiss Federal Council Seeks Clarification Over UBS Ruling

by Ulrika Lomas, Tax-News.com, Brussels

15 January 2010

The Swiss Federal Council would welcome a decision by the Financial Market Supervisory Authority (FINMA) to refer the recent ruling by the Federal Administrative Court in the UBS case to the Federal Supreme Court, according to a recent announcement by its president, Doris Leuthard.

Given that the court did not criticize the actual transfer of client information, but rather the legal basis for it, the Federal Council has maintained that it would welcome an appeal, as it would serve to clarify the legal position at the time.

Switzerland’s Federal Administrative Court ruled that the order issued by FINMA to disclose UBS client information to US authorities was unlawful.

According to the Federal Council, the key issue in the case centers on whether or not the Council should have invoked the need for emergency law, instead of opting to transfer responsibility directly to FINMA.

While the court acknowledged the fact the Federal Council was faced with a crisis situation, it also ruled that the transfer of data should have been carried out by the Federal Council and not by FINMA, Leuthard emphasized.

Defending the Federal Council’s decision, Leuthard explained that the Council had carefully considered three options at the time:

• Whether or not to continue with the mutual assistance procedure. However, this option was rejected given that the process would ultimately have taken too long;
• Whether or not to transfer client data to the US, and if so, whether FINMA or the Federal Council should issue the order, or whether the bank itself should undertake the task (although this would have had dire consequences for the bank); and
• Whether or not a political solution between the two governments could be achieved. It was felt, however, that this avenue had already been fully explored.

Given the situation and the need to act swiftly in order to save both the bank and the Swiss financial center, the Federal Council requested that FINMA issue the order, Leuthard concluded.

FINMA has yet to decide whether to pursue the matter.

Recommended