Oregon AG seeks $25 million from Swiss bank

Chris Rizo Apr. 1, 2009, 12:00pm

John Kroger (D)

SALEM, Ore. (Legal Newsline)--Oregon Attorney General John Kroger said Wednesday that the state is seeking to recover from Swiss bank UBS AG $25 million in losses suffered by the Oregon Public Employees' Retirement Fund.

In a motion filed Tuesday, the state asked a New York federal court to make Oregon a co-lead plaintiff in an existing securities fraud class action case against the Zurich-based bank. The lead plaintiff in the case is the New Orleans Public Employees' Retirement System.

The attorney general claims that because executives at the bank were found to have masterminded an international tax evasion scheme, UBS stock value plummeted and the state pension system suffered as a result.

"UBS engaged in a massive scheme to help wealthy clients evade their taxes," Kroger said. "We intend to hold UBS accountable for their illegal and unethical conduct."

Kroger and state Treasurer Ben Westlund, both Democrats, also claim that the bank failed to notify state officials that its money was tied up in risky investments, including in the subprime mortgage markets and auction-rate securities.

"Oregonians and our state's future have been harmed by these bad deeds, and it demands decisive action," Westlund said. "We will not stand idly by and allow Oregonians' money to be vaporized by bad actors in international banks."

In a statement, officials noted that UBS stock traded above $66 in mid-2007, before the fraud was uncovered. The trading price was $12.26 on Jan. 26, which is a loss of more than 60 percent.

In February, the bank acknowledged the tax scheme and agreed to pay $780 million to settle the charges and avoid indictment.

The company said Sunday it has placed its banker formerly in charge of offshore accounts for Americans, Martin Liechti, on paid leave amid a U.S. federal investigation.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.

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