The Hypocrisy of Doing Business with Hypocrites

09/25/2009 05:12 am ET | Updated May 25, 2011

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.

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