The Swiss Financial Market Supervisory Authority, known as Finma, exceeded its authority when it told the bank Feb. 18 to deliver the information to the U.S., the Federal Administrative Court in Bern ruled Friday. The case is separate from a larger agreement made in August to turn over data on as many as 4,450 UBS accounts.
"This decision focuses on customers whose details were transferred before the U.S. and Switzerland entered into the new treaty," said Walter Frei, a lawyer who represents clients among the 4,450. "Based on this decision, I don't think that we can foresee a positive effect for the other cases."
Finma ordered UBS to hand over customer information so the bank could avoid criminal prosecution in the U.S., which may have led to the bank's insolvency, according to the regulator. The Justice Department accused UBS of conspiring to defraud the U.S. by helping Americans hide accounts from the Internal Revenue Service.
The five judges rejected Finma's argument that action was needed to prevent the bank's insolvency and ensure the stability of the Swiss financial system. The government and the parliament are the only institutions with the authority to implement state of emergency laws, the judges said in their 60-page ruling.
Finma will examine the decision and decide whether to appeal, the Bern-based market supervisor said in a statement. The Swiss government will analyze the ruling and comment on Wednesday at its weekly news conference, spokesman Andre Simonazzi said. UBS spokesman Serge Steiner declined to comment.
"It's too early to say what our next steps will be. We need a definitive decision first," Andreas Rued, the lawyer who represented the UBS clients, said by telephone. Rued, 38, said he expects an appeal to the Supreme Court and decisions about further remedies must wait until the decision is final. Criminal complaints he filed with prosecutors over possible breaches of Switzerland's 76-year-old banking secrecy law are pending.
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