Institutional shareholder advisory firm ISS/RiskMetrics is recommending UBS AG (UBS) shareholders oppose a move to absolve or "discharge" the Swiss bank's board and top management over losses which began unfolding in 2007.

In a recent recommendation, ISS said it would be "inappropriate" to formally discharge--or absolve--former management for 2007 for their role in the Swiss bank's more than $50 billion in losses on illiquid securities.

Discharging board and management is largely an annual formality, and means the executives are honorably dismissed for that year. But this year, UBS is asking for discharges for 2007, 2008, 2009. The request has sparked ire from some investors in Switzerland, including activist fund Ethos, who argue that would mean former executives may no longer be held culpable for UBS's massive losses of past years.

"Our view is that, based on the fact that there is evidence that deficient board and managerial oversight played a role in the bank's inability to sufficiently recognize and assess risks related to the U.S. housing market prior to the financial crisis, and due to lingering questions about board and managerial responsibility with respect to the bank's role in the tax scandal with the U.S., a general approval of discharge for all directors and senior managers who served during the year 2007 would be inappropriate," ISS/RiskMetrics wrote.

ISS/RiskMetrics says it backs the management and board discharge for 2008 and 2009, when new management took over.

Asked for comment, UBS referred to an editorial published by board member Bruno Gehrig Sunday. In the piece, Gehrig says UBS's request for formal discharge is the logical consequence of the bank's decision not to pursue legal action against former executives. The bank said it hadn't asked for discharges for 2007 and 2008 until now, choosing instead to wait until various investigations into the losses had been concluded.

Swiss authorities also said in December they would not seek charges against former UBS board members and management.

The company's shareholder meeting is April 14.

Web site: http://www.riskmetrics.com

-By Katharina Bart, Dow Jones Newswires; +41 43 443 8043; katharina.bart@dowjones.com
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