UBS, U.S. seek deal over secret accounts

Federal prosecutors and Swiss banking giant UBS sought Sunday to delay a hearing today so that they could try to settle their dispute over releasing names of 52,000 wealthy American bank clients suspected of offshore tax evasion.

The request, made in a federal court in Florida, came amid fresh threats by the Justice Department that it might impose financial sanctions and possibly indict UBS should it ultimately refuse to disclose the names if required to do so by a judge.

The two sides are to square off in front of U.S. District Judge Alan S. Gold. The joint filing asked Gold to delay the hearing until Aug. 3.

The dispute has escalated into a diplomatic drama and has threatened to pierce the veil of Swiss financial secrecy.

UBS and the Swiss government have said they will not disclose client names, even if ordered to do so by a judge, because that would violate Swiss laws governing financial secrecy and subject UBS executives to prosecution in Switzerland.

In February, the Internal Revenue Service sued UBS, the world's largest private bank and a pillar of the Swiss economy, to force it to disclose the names of the American clients suspected of tax evasion through UBS' offshore private-banking division.

The civil lawsuit came a day after UBS escaped indictment by agreeing to pay $780 million to settle criminal accusations that it had defrauded the IRS by allowing American clients to evade taxes by hiding billions of dollars in income offshore.

The Justice Department also increased its pressure on UBS on Sunday, saying in a separate filing it would consider imposing unspecified monetary sanctions on the bank if it ultimately failed to turn over the names upon a judge's order.

In the same memorandum, the Justice Department said failure to comply with an order to release the names might put the bank in breach of its $780 million settlement — a breach that could pave the way for prosecutors to indict UBS.