Judge reverses ruling in Julius Baer leak case

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SAN FRANCISCO | Fri Feb 29, 2008 6:26pm EST

SAN FRANCISCO (Reuters) - A U.S. judge on Friday reversed his earlier ruling shutting down a Web site with private bank data from Switzerland's Julius Baer Holding AG

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U.S. District Judge Jeffrey White reversed his February 15 order after hearing arguments by attorneys from the American Civil Liberties Union and other free-speech groups that his decision amounted to unconstitutional prior restraint.

"There are serious questions of prior restraint and possible violations of the First Amendment," White ruled from the bench in his San Francisco courtroom.

"The court has serious questions whether those concerns raised before the court make the granting of the relief requested by the plaintiffs constitutionally appropriate," he added.

White ruled that Baer, based in Zurich, could continue with its lawsuit against the Web site, Wikileaks.org, and Dynadot LLC, the Web site's domain-name registrar. White had issued a permanent injunction on February 15 ordering Dynadot, based in San Mateo, California, to disable the Wikileaks.org domain.

Baer had sued Wikileaks and Dynadot earlier this month after the site posted documents including bank records of about 1,600 clients with accounts in a Baer subsidiary in the Cayman Islands.

Switzerland is known as a haven for rich foreigners seeking to avoid taxes at home as the country does not consider tax evasion a crime.

The legal storm comes as Baer and other private banks watch international pressure mount on Liechtenstein, a European principality and tax haven, to lift its veil of bank secrecy. Many countries such as Germany and the United States say such secrecy helps their citizens to evade taxes.

Baer said on Thursday that the documents, posted on Wikileaks.org by a self-described whistle-blower, alleged tax and money laundering schemes involving Cayman Islands accounts. The bank said the documents were falsified and it denied the claims made in them.

Baer faced an international backlash after news media reported on the court injunction. Baer said the documents were prohibited from publication under both U.S. and Swiss laws.

Wikileaks describes itself as "developing an uncensorable Wikipedia for untraceable mass document leaking and analysis" and committed to assisting "people of all regions who wish to reveal unethical behavior in their governments and corporations."

Judge White's earlier ruling, which endorsed a settlement between Baer and Dynadot, backfired as it drew huge numbers of visitors to so-called mirror sites set up by Wikileaks.org that provided a back door to the site. White said the publicity generated by his earlier ruling was a factor in his reversal.

"The court has serious questions about the effectiveness of any order this court might issue, given the current state of affairs, that these matters are fully out in the public domain, in the virtual domain," White said in making his ruling on Friday.

Attorneys for news organizations and Web sites had argued that prior restraint should be limited to only the most extreme cases, such as when national security is at stake. Other remedies, such as lawsuits seeking monetary damages following publication of sensitive matters, should be pursued instead, they said.

(Editing by Leslie Gevirtz, Richard Chang)

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