- Key Insight: A federal court hearing yielded no progress in the dispute between UBS and a Jewish human rights group.
- What's at Stake: The Swiss bank believes it's protected by a 1999 settlement from any new lawsuits regarding Credit Suisse's work with the Nazis, and asked a federal judge to confirm that in a new order.
- Expert Quote: Faith Gay, a lawyer for the nonprofit Simon Wiesenthal Center, said the order requested by UBS "is as broad as the Grand Canyon."
A court hearing Tuesday that was aimed at resolving a dispute between UBS and a Jewish human rights group over Nazi-related accounts ended in continued stalemate.
UBS, which acquired Credit Suisse in 2023, has been bogged down for years in controversy over the predecessor bank's World War II-era dealings with the Nazis. In UBS' view, a
So on Tuesday, UBS sat down in a Brooklyn courtroom across from lawyers for the Simon Wiesenthal Center, one of the Jewish groups that endorsed the 1999 settlement, to ask U.S. District Judge Edward Korman for a "clarifying order" about what the signatories can and cannot do.
"We do think that the endorsement of the settlement agreement does prohibit press releases, and public statements, and threats of litigation, and demands for money that call into question the finality and closure the settlement agreement and the endorsement brought," said UBS lawyer David Burns, a partner at Gibson, Dunn & Crutcher.
More than two hours later, things were less clear than they had been at the start. The judge did not issue the order UBS requested, and lawyers for the Wiesenthal Center questioned the very purpose of the hearing.
"What are we doing here?" asked Faith Gay, a partner at Selendy Gay who represents the Wiesenthal Center. "There is no case or controversy here. We have not sued UBS. UBS has not sued us."
As the discussion dragged on, Burns repeatedly asked Judge Korman to clarify two things: first, that the 1999 settlement "covered all claims past, present and future" with regard to the Nazis, World War II and the Holocaust; and second, that it precludes the Wiesenthal Center and other signatories from suing or speaking publicly against UBS on these matters.
The Wiesenthal Center countered that this would not be a clarification, but a modification of the agreement — and an overly large one.
"What they have given to you, Your Honor … is as broad as the Grand Canyon," Gay said.
The controversy over Swiss banks and the Nazis goes back decades, and has taken
Twenty-seven years ago, Jewish community groups reached a $1.25 billion settlement with Swiss banks accused of holding assets looted by the Third Reich. Seventeen Jewish organizations — including the Wiesenthal Center — signed onto the agreement, and that was widely thought to be the end of the story.
But that changed in 2020 when the Wiesenthal Center revealed new information about Nazis in Argentina who had contributed to bank accounts at a Credit Suisse predecessor. This led Credit Suisse to conduct further historical research, hiring a former U.S. prosecutor named Neil Barofsky as independent ombudsman of the project.
But in 2022, Credit Suisse fired Barofsky, and then the
When UBS acquired Credit Suisse in 2023, it inherited the research project.
In the clarifying order UBS sought Tuesday, the bank requested that the contents of Barofsky's investigation — which is not yet completed — be included among the topics covered by the 1999 settlement. That, in UBS' view, would mean that no one who endorsed the agreement could "promote any public controversy" or threaten legal action against UBS over matters that Barofsky uncovers.
On this point, the Wiesenthal Center cried foul.
"It's not even finished," Gay told Judge Korman, referring to Barofsky's investigation. "You haven't seen that report. I haven't seen that report. I don't know how we could possibly have an order like this."
In recent months, UBS has refused to give Barofsky access to about 150 Credit Suisse documents that he says he needs to review in order to complete his work.
UBS has said that the documents are privileged communications between the bank and its lawyers, as well as attorney files, from the 1990s. Meanwhile, Barofsky has said that UBS has acknowledged that documents created in the 1930s and 1940s have been included in the privilege review because they were gathered during the 1990s-era review.
The bank has said it will only hand over the documents if it receives assurances that no lawsuits can be brought as a result — hence its need for a clarifying order.
On Tuesday, Judge Korman asked both UBS and the Wiesenthal Center if there were a set of conditions they could agree to in order for Barofsky to complete his investigation. Neither side gave a definitive answer.
After the hearing, UBS didn't appear to be budging.
"We are confident in our position which we presented today at the hearing," the bank said in a statement.
Meanwhile, the Wiesenthal Center thanked the judge for his time.
"We deeply appreciate Judge Korman's thoughtful and patient consideration of this matter, which is of such significance to the parties and many other non-party stakeholders including the Simon Wiesenthal Center," Gay said in a written statement.
Neither side commented on what the next steps in the dispute would be, if any.
