- What's at stake: A 1999 settlement agreement regarding assets of Holocaust victims mandated that Jewish groups such as the Simon Wiesenthal Center not sue or promote public controversy against the Swiss banks.
- Key insight: UBS tried to preemptively silence new claims that Credit Suisse had concealed Nazi-linked assets.
- Expert quote: UBS cannot assert a controversy without "actually filing any motion or lawsuit," Senior U.S. District Judge Edward R. Korman wrote.
A federal judge on Tuesday denied a request by Swiss banking giant UBS to clarify the scope of a 1999 settlement agreement amid new allegations that Credit Suisse concealed billions of dollars in assets taken by Nazi Germany.
The issue resurfaced following UBS's acquisition of Credit Suisse in 2023 amid the allegations that Credit Suisse may have maintained undisclosed accounts linked to Nazi figures or looted assets that were not part of the settlement three decades ago.
Senior U.S. District Judge Edward R. Korman, in Brooklyn, New York, denied UBS's request for clarification, calling it an attempt to obtain an advisory opinion based on "hypothetical events."' Korman stressed that UBS sought an opinion without "actually filing any motion or lawsuit with an adversarial posture."
In essence, UBS was asking the judge to issue a ruling that would have prevented parties to the original agreement to pursue any further claims against UBS, as the owner of Credit Suisse, using the 1999 settlement as a legal basis. The judge rejected that request.
"UBS seeks a classic advisory opinion concerning hypothetical events and events that are not before me," Korman
"UBS may well believe that it would benefit from a court's analysis of the 1999 Settlement Agreement—but unless and until a genuine case or controversy arises that requires judicial interpretation of its terms, the Agreement will continue to speak for itself," he wrote.
Korman, who oversaw the original 1999 settlement known as In re Holocaust Victim Assets Litigation, re-opened the case in 2023 at the request of Credit Suisse. After two years, UBS had taken over and reported to the court in January that mediation had reached an impasse with the Simon Wiesenthal Center, the prominent Jewish human rights group.
The Simon Wiesenthal Center in 2020 had formally accused Credit Suisse of failing to disclose accounts held by Nazi clients that should have been identified and included in the previous settlement. Credit Suisse retained Neil Barofsky as an independent ombudsperson and lead investigator to look into the allegations. The accusations led to an investigation by the Senate Budget Committee,
During hearings, Barofsky, a partner at the law firm Jenner & Block and a former inspector general for the Troubled Asset Relief Program, told senators that his probe found 890 bank accounts potentially tied to Nazis. He also found indications that
UBS had initially sought the court's assistance in enforcing the settlement, claiming that the Simon Wiesenthal Center was violating the agreement because it allegedly instigated a congressional subpoena. But UBS then revised its request, explicitly stating that it did not seek to enforce the settlement agreement against the Simon Wiesenthal Center. Instead, the bank asked for a court order clarifying the scope of the agreement that barred the parties from pursuing further legal action or promoting public controversy.
The judge rejected its request.
"UBS wants the Court to say what the Settlement Agreement means so that UBS can (1) anticipate what would happen if an entity like SWC were to bring a future suit against the bank; and (2) curb what it perceives as violations of the Settlement Agreement even though it is not advancing any motion to enforce the Agreement," Korman wrote. Because UBS's request plainly calls for an advisory ruling, there is no basis for subject matter jurisdiction and UBS's motion must fail."
