From: Reuters
Published May 7, 2008 01:37 PM

Senior UBS employee was detained in U.S. tax probe

By Katie Reid and Martha Graybow

ZURICH/NEW YORK (Reuters) - A senior UBS <UBSN.VX> employee was briefly detained by U.S. authorities as part of a probe into whether U.S. clients tried to evade tax obligations with the firm's help, the Swiss bank said on Wednesday.

UBS said the employee was detained under a material witness warrant but declined to identify the person.

"Our understanding is that the respective employee, who has not been charged with any wrongdoing by the U.S. government, will remain in the United States pending discussions with the U.S. authorities regarding resolution of his status as a witness," a spokesman for UBS said in an e-mailed statement.


The U.S. Department of Justice and the Securities and Exchange Commission are investigating UBS's conduct in relation to cross-border services provided by UBS advisers to U.S. clients from 2000 to 2007, UBS said. The bank said it was cooperating with the investigations.

A person briefed on the situation said the detained executive was Martin Liechti, the Zurich-based head of North and South America for UBS's international wealth management business.

An e-mail sent to Liechti by Reuters generated a response that said, "I'm currently traveling with limited access to my e-mail."

The Department of Justice is examining whether U.S. clients tried to evade tax obligations with the help of UBS client advisers, the bank said in its statement.

The DOJ investigation is looking at whether clients sought to avoid restrictions on their securities investments imposed by a "qualified intermediary agreement" UBS entered into with the U.S. Internal Revenue Service in 2001, the bank said.

"The SEC is examining whether Swiss-based UBS client advisors engaged in activities in relation to their U.S.-domiciled clients that triggered an obligation for UBS Switzerland to register with the SEC as a broker-dealer and/or investment adviser," UBS said.

A Justice Department spokesman in Washington and an SEC official both declined to comment.

(Additional reporting by James Vicini in Washington; Editing by Quentin Bryar, Richard Chang)

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