Here's breaking news: Your trusts and estates lawyer has been violating U.S. law by helping his clients hide money offshore in illegal trusts. Previously, he had brushes with the law due to allegations he deceived his clients. He quietly settled these charges.
Would you still trust him to handle your estate?
Of course not.
So who's managing your money?
UBS describes itself as "one of the world's leading financial firms." It employs more than 70,000 people. In the U.S., it has more than 8,000 financial advisors "ready to serve you."
UBS has very lofty principles. Here they are:
"UBS is firmly committed to corporate responsibility and actively strives to understand, assess, weigh and address the concerns and expectations of the firm's stakeholders. This process supports UBS in its efforts to safeguard and advance the firm's reputation for responsible corporate conduct. In very direct ways, responsible corporate conduct helps create sustainable value for the company."
Trying to keep the tarnish off these values has been a full time occupation for teams of UBS lawyers recently. Here's what I mean:
In February, 2009, UBS paid a whopping $780 million to avoid a criminal indictment for defrauding the U.S. government by helping Americans secrete their assets in Switzerland.
In a settlement announced this week, UBS agreed to disclose the names of 4,450 Americans who used its services (for a fee, of course) to cheat the U.S. government.
This is not the first time UBS has engaged in conduct that crosses the line.
On August 8, 2008, UBS agreed to buy back $8.3 billion of auction-rate securities it sold retail customers. It was accused of misleading investors concerning the liquidity of these securities. Of course, it admitted nothing in the settlement agreement.
In April, 2003, UBS (and nine other top investment firms) agreed to settle claims that its analysts defrauded retail investors. UBS contributed $80 million to the global settlement fund, without admitting any wrongdoing.
As the analyst settlement demonstrates, UBS is probably no worse than many of its competitors.
It's bad enough that brokers separate clients from their money every day by touting their services as "financial pros" who add value, when the reality is quite to the contrary.
It's worse that their conduct is such a departure from the values they espouse.
You could make the case that refusing to do business with them is a moral imperative.
That is the case I am making.
The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein.
Dan Solin is the author of The Smartest Retirement Book You'll Ever Read.