The business stories that matter, by Fortune's Colin Barr
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May 7, 2008, 7:04 am

UBS banker held in tax probe

Think UBS (UBS) has enough problems? Think again. The head of the Swiss bank’s North and South American wealth management business was detained in the United States amid a probe of whether UBS helped its clients evade taxes. Martin Liechti was held in connection with a Justice Department probe of advice UBS gave American private banking clients between 2000 and 2007, the Financial Times reports. He hasn’t been charged with any wrongdoing, but is being held as a material witness, UBS said. UBS also said it faces Securities and Exchange Commission scrutiny of broker registration issues, the FT said, while Bloomberg notes that UBS faces a tax evasion probe in Germany as well.

The developments come after another rough week for the big bank. UBS said yesterday it would cut 5,500 jobs in the wake of its latest quarterly loss, which reflected massive writedowns on mortgage-related securities and a sharp decline in wealth management inflows. The firm also sold a big chunk of subprime assets to BlackRock (BLK), which is setting up a fund to hold the assets and sell them when the market turns. Shares fell 3% in trading in Frankfurt Wednesday morning.

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Colin Barr covers business and finance for Fortune.com. Previously he was an editor at TheStreet.com and author of the weekly Five Dumbest Things on Wall Street column, and an editor at Dow Jones Newswires.
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