The Sovereign Society Offshore A-Letter
Friday, August 28, 2009
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Offshore Bellwether Blacklists the U.S.

“Enough is enough” for Switzerland’s
Oldest Private Bank

Dear A-Letter Reader,

This Wednesday morning, I received a phone call from Rob Vrijhof, (right) our long time investment and banking associate in Zurich and a member of the Sovereign Society Council of Experts.

Rob called my attention to the announcement today by the venerable Wegelin & Co., Switzerland’s oldest private bank, that it will stop doing business in the United States and with Americans.

Founded in 1741, the St. Gallen-based bank, said their decision was a response to stricter measures introduced in the U.S. against tax evasion and projected changes in U.S. estate tax laws, which could make some non-U.S. citizens liable for U.S. taxes if they inherit U.S. securities.

The bank did not mention new U.S. government demands that offshore banks giving investment advice to U.S. persons must register and qualify under SEC rules…which is itself a blatantly illegal attempt to extend American law well beyond its normal jurisdictional area (which ends at the U.S. border, regardless of what the feds may have you believe).

So drastic have the IRS/SEC extraterritorial measures become that even members of the U.S. Congress have protested they go too far.

“Untenable Position”

In their letter to investors, Wegelin bank said Swiss banks were being forced into "an untenable position," and in all fairness, they make a good point…

Given the lack of clear definitions in the IRS proposed rules, Wegelin believes the imposition of being expected – by the IRS – a to know which clients were liable to pay U.S. taxes is "an impossible undertaking.”

"The danger of inadvertently making false declarations to the U.S. tax authorities will be too great," the letter went on to explain.

The bank gave the United States an added zinger, saying it believes the U.S. government overestimates its attraction as a financial center, thus Wegelin is advising its clients to pull out of all U.S. securities investments.

So the inevitable question, then…Are more banks going to follow in Wegelin’s footsteps?

Already the IRS-plagued UBS has (for selfish reasons) abandoned its U.S. customers, as has Credit Suisse. Reports say that some Swiss private banks still are willing to serve American clients, and we know that to be true. British bankers also have been discussing a ban on U.S. clients.

Obviously, and as always, The Sovereign Society now has in place agreements with reputable Swiss private banks willing to accept new accounts from those who identify themselves as our members.

These arrangements are in full compliance with IRS and SEC rules and with other U.S. laws. A U.S. client must sign an IRS Form W-9 that allows the offshore bank to report required information to the IRS.

As it has been since our founding 11 years ago, our staff is available to assist in opening a Swiss or other offshore account. Take advantage of these special Swiss banking arrangements -- sign up here for Sovereign Society membership. Once you are a member, you can contact us for help via email at info@sovereignsociety.com

Yours truly,

Bob Bauman, JD
Legal Counsel for The Sovereign Society
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Daily Sovereign:
Does Wegelin Bank know Something You Don’t?

By Matt Collins

One point in Bob’s article above stuck out to me; that Wegelin thinks the U.S. overestimates its appeal as a financial center. No single statement could’ve been more spot-on, given recent developments and data releases.

That’s right folks; we’re the new, oft-overrated home of the world’s toxic securities…and that’s going to change the America you’ve known and loved for your whole life. Don’t believe me? Take a look at the charts…

What you have here – courtesy of Jesse’s Café Americain – is the S&P 500 overlaid onto capital inflows. The blue bars represent how much money foreign investors were sending into the U.S. over the last few years. See a bit of a correlation there?

Having been in business since the 1740’s, it’s safe to say that Wegelin’s has probably seen this kind of progression before. I don’t think I have to tell you that – historically speaking – a crescendo of fraud, asset bubbles, corruption, failing governments, utterly overwhelming debt and an upsurge of socialist policies… generally aren’t bullish developments for your domestic market
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