UBS has asked a federal judge in Brooklyn to formally limit its exposure to new litigation tied to the Holocaust and World War Two, seeking a court declaration that a 1999 settlement fully resolves such claims related to Credit Suisse and its predecessors.
At a hearing that ran two hours and 15 minutes, counsel for UBS pressed U.S. District Judge Edward Korman to enter what the bank described as a "clarifying order" confirming that the $1.25 billion payment made in 1999 covered "all claims, past, present and future" arising from the Holocaust, World War Two, and their prelude and aftermath. According to court filings, Credit Suisse distributed the $1.25 billion among more than 458,000 Nazi victims and their families.
The request from UBS followed findings produced by a probe commissioned by Credit Suisse in 2020 that uncovered additional ties between the bank - and institutions that preceded it - and the Nazi era. That investigation flagged 890 accounts with potential links to Nazis. UBS executives said the judge's intervention was necessary to prevent new suits based on information that the probe might reveal.
UBS attorney David Burns told Judge Korman that the Simon Wiesenthal Center, a Jewish human rights organization, should not be allowed to reopen the settlement, "promote public controversy" about it, or file fresh claims should further details surface about Credit Suisse's wartime relationships. "The Wiesenthal Center has from the outset made the very public and private claim that Nazi assets are not part of the settlement, and has threatened litigation," Burns said, adding that UBS sought "complete closure." The judge did not indicate when he would rule on UBS's request.
Faith Gay, a lawyer representing the Simon Wiesenthal Center - which previously endorsed the 1999 settlement - criticized UBS for seeking what she described as an advisory opinion that "expands and reinterprets" the settlement, freeing a range of claims she said was "as broad as the Grand Canyon." Gay also said her client is not threatening litigation. "There's nothing for you to decide," she told the judge, who supervised the original settlement negotiations. "And yet they've given us this proposed order that binds all parties."
Gay additionally accused UBS of infringing her client's free speech rights by attempting to silence debate about the settlement's validity, using the metaphor of "putting a sock in Simon Wiesenthal's mouth."
A central element of the dispute is UBS's refusal to produce roughly 150 documents sought by Neil Barofsky, the lawyer conducting the investigation, on the grounds that those records are protected by attorney-client privilege. UBS said it has already delivered 16.5 million documents to Barofsky and would provide the contested files if Judge Korman issued an appropriate clarifying order.
Barofsky is expected to conclude his inquiry this year. During the hearing, Judge Korman said he did not recall Nazi assets being raised during the 1999 settlement talks. He urged the parties to try to reach agreement on which documents could be produced.
The investigation and the court hearing have drawn congressional attention. The U.S. Senate Judiciary Committee received testimony on Barofsky's probe at a recent hearing. Committee chairman Senator Charles Grassley, a Republican, told reporters that among the holders of the 890 accounts identified in the probe were the German Foreign Office - which the senator said arranged deportations of Jews to concentration camps - the SS paramilitary organization, and a German arms manufacturer.
Both UBS and Credit Suisse have issued apologies for their roles connected to the Holocaust.
Summary
UBS asked a federal judge to clarify that a 1999, $1.25 billion settlement resolving Holocaust-related claims covers all past, present and future claims connected to Credit Suisse and its predecessors, after a 2020-commissioned investigation identified additional potential Nazi-linked accounts. A dispute over about 150 documents, which UBS says are privileged, remains central as the investigator nears the conclusion of his work.
Key points
- UBS seeks a court order that would declare the 1999 settlement to be all-encompassing for Holocaust-related claims tied to Credit Suisse - this could affect legal exposures across the banking sector.
- An investigator hired by Credit Suisse identified 890 accounts with potential Nazi links, prompting fresh scrutiny and congressional attention.
- There is an ongoing dispute over roughly 150 documents the bank says are privileged; UBS reports it has already produced 16.5 million documents to the investigator.
Risks and uncertainties
- Legal uncertainty - A decision permitting additional claims or limiting the scope of the 1999 settlement could lead to renewed litigation risk for the banking sector and potential reputational damage.
- Document production dispute - Whether the contested 150 documents must be turned over could affect the completeness and timing of the ongoing investigation and any related legal actions, with implications for regulatory and legal departments at banks.
- Public scrutiny and political attention - Congressional hearings and public statements about identified accounts may increase reputational pressure on financial institutions involved and could influence market perceptions of legacy risk.