Business Context and Reporting Period
This Form 6-K, filed on February 20, 2019, by UBS Group AG and UBS AG, reports on a significant legal development involving a French court judgment. The filing consists of a news release regarding a cross-border matter concerning allegations of illicit solicitation and money laundering.
Key Financial Metrics
The filing does not provide standard financial performance metrics such as revenue, profit, cash flow, margins, debt, or liquidity. The only financial figures disclosed relate to the penalties and damages assessed by the French trial court:
- Penalty for UBS AG: EUR 3.7 billion
- Penalty for UBS (France) SA: EUR 15 million
- Civil Damages: EUR 800 million
Material Changes and Legal Developments
The primary material change reported is the conviction of UBS AG and UBS (France) SA by a French trial court. The court found the entities guilty of illicit solicitation and laundering the proceeds of tax fraud. UBS strongly contests this verdict, stating that:
- The conviction lacks concrete evidence and relies on unfounded allegations from former employees who were not heard at trial.
- No evidence was provided that French clients were solicited on French soil to open accounts in Switzerland.
- The judgment effectively applies French law in Switzerland, which UBS argues undermines Swiss sovereignty.
- The calculation methodology for the fine and damages lacks proof and credibility.
- The predicate offense of original tax fraud by French taxpayers was not proven.
Guidance, Outlook, and Management Commentary
UBS has announced it will appeal the verdict. Under French law, this appeal suspends the trial court's judgment and transfers the case to the Court of Appeals for a complete retrial. Management emphasizes that the bank respected its obligations under Swiss and French law, as well as the European Tax Savings directive. The filing includes standard cautionary statements regarding forward-looking statements, noting that actual results may differ materially from expectations due to various risks and uncertainties.
Investor Verification Checklist
- Verify the status of the appeal process in the French Court of Appeals.
- Review UBS's Q4 2018 report and Annual Report on Form 20-F for historical financial context and prior disclosures regarding this matter.
- Assess the potential impact of the EUR 4.585 billion total assessed amount (penalties and damages) on future financial statements if the conviction is upheld.
- Monitor for any additional regulatory steps or legal actions mentioned in the written decision.