UBS execs knew of risk of U.S. rule breaches: report

(Reuters) - Senior executives at Swiss bank UBS knew some of their bankers had acted in a way that meant they risked breaching American securities laws at least a year before the U.S. inquiries began, the Financial Times said in its Wednesday edition, citing a letter.

The paper said the May 2006 letter, now in the hands of the U.S. Department of Justice, was written by Peter Kurer, UBS chairman and then the bank's general counsel, and copied to Marcel Rohner, then head of private banking and now group chief executive, as well as Lawrence Weinbach, a UBS director who sits on the board's audit committee.

The letter was written to Bradley Birkenfeld, a former UBS banker at the center of U.S. inquiries into whether the bank helped its wealthy American clients evade taxes by transferring their money to European tax havens, the paper said.

Birkenfeld, who admitted this year to helping a billionaire U.S. businessman evade millions in tax while at UBS, has been co-operating with the authorities, the paper added.

In May, the U.S. Department of Justice and the Securities and Exchange Commission revealed they were investigating UBS's conduct in relation to cross-border services provided by UBS advisers to U.S. clients from 2000 to 2007.

In the letter, Kurer acknowledged he had received information from a whistleblower, who had drawn attention to the problems the bank faced because of the inadequate securities registration, the paper said.

"I thank you for drawing my attention to this compliance issue," Kurer was quoted as writing in the letter.

He added that in keeping with bank policy, the whistleblower "must not fear any retaliation."

The paper said UBS officials stress the whistleblower referred only to possible breaches of securities law, and not the tax evasion issues being investigated.

UBS also said Kurer acted swiftly to tighten procedures after investigating the whistleblower's allegations, and introduced measures to ensure the procedures were properly implemented and observed, according to the paper.

UBS was not immediately available for comment.

(Reporting by Ajay Kamalakaran in Bangalore; editing by Alexander Smith)