UBS will pay US$ 1,435 million to settle complaints in the US.

UBS agreed to pay $1.435 million in penalties to settle a civil misconduct lawsuit related to the Swiss bank’s underwriting and issuance of toxic financial products or “subprime”the type of asset that caused the financial crisis of 2008.

This settlement resolves the latest case brought by a Justice Department task force investigating the conduct of banks and other entities for their role in creating and issuing residential mortgage-backed securities (RMBS), the so-called “subprimes”issued in 2006 and 2007.

Following an extensive investigation, US authorities filed a lawsuit in November 2018 alleging that UBS defrauded investors in connection with the sale of 40 RMBS issued in 2006 and 2007.

According to authorities, UBS had knowingly made false and misleading statements to buyers of these toxic products, in violation of the law.

Ultimately, the 40 RMBS suffered substantial losses.

“The significant civil penalty imposed in this case serves as a warning to other financial market players who seek to profit illicitly through fraud that we will hold them to account no matter how long it takes,” Brooklyn court prosecutor, Breon Peace, who was investigating the case, said in a statement.

With this agreement, the Department of Justice has raised more than US$ $36 billion in civil penalties from 18 major banks and rating agencies for their conduct related to subprime mortgages, including Bank of America; Barclays; Citigroup; Credit Suisse; Deutsche Bank; General Electric; Goldman Sachs; HSBC; JPMorgan; Moody’s; Morgan Stanley; Nomura; Royal Bank of Scotland; S&P; Societe Generale, and Wells Fargo.

The UBS case is the latest for the RMBS task force resolved by the US Attorney for the Eastern District of New York, which has recovered more than US$ 11,000 million through sanctions.

Source: AFP