UBS defends its secrecy rights, but 52,000 customers are still nervous

In answer to a lawsuit filed by the U.S. in federal court in Miami, UBS said it would not reveal the names of 52,000 American customers because that would require the bank to break Swiss law. UBS (UBS) told the court the U.S. lawsuit tramples on Swiss sovereignty by trying to enforce summonses from the IRS in direct violation of U.S. and Switzerland tax treaties. UBS believes the issues should be settled diplomatically.

Right now under a 1996 treaty, Swiss banks may turn over account data only when proof of "tax fraud or the like" can be proven. Complicating matters is the fact that under their own legal code the Swiss don't view tax evasion as a crime. But it's the unprecedented shotgun approach of the current action that seems to particularly rankle UBS. In the court filing the company's lawyers wrote the action "appears to be one of the broadest, if not the broadest, ever served by the IRS on any institution, domestic or foreign."