UBS: no legal action against former execs

Swiss bank UBS said Thursday that it will not take legal action against former executives and board members for the huge losses suffered during the U.S. subprime crisis that forced a bailout of the company.

Kaspar Villiger, chairman of Switzerland's largest bank, said in a statement that the company had learned lessons from the crisis and now was focusing on the future.

"What happened should not have been allowed to happen. With our decision to refrain from legal proceedings, we do not want to gloss over the mistakes made by UBS ( UBS - news - people ) or absolve those involved of their corporate responsibility," Villiger said. "Today, we have laid the foundation for drawing a line under the future."

The transparency report acknowledges that the bank's expansion into investment banking was not planned in a sufficiently systematic manner, that incentives to generate revenues were not weighed appropriately against risks, and that this happened across business units, multiplying the bank's exposure.

"Despite warnings, the bank falsely believed that its financial products in relation to the U.S. real estate market were valuable and sufficiently hedged against losses," the report said.

UBS, long the star of the Swiss banking industry, lost billions of dollars during the global economic crisis and the confidence of many investors during a lengthy tax dispute with the United States.

Regarding this dispute, the report acknowledged that the bank had not made a comprehensive assessment of the compliance risk of its U.S. cross-border wealth management business before the investigation by U.S. authorities.

Despite the failures, the bank said there would be no legal action against those running the bank at the time because of the costs involved, negative publicity such activity would generate and uncertain outcome.

In a statement attached to the report, independent law professor Peter Forstmoser said there was sufficient evidence to take legal action, but he called the decision not "appropriate" to protect the interests of the bank and the shareholders.

(Published by Forbes - October 14, 2010)