UBS AG (NYSE:UBS) and several of its U.S.-based affiliates agreed to a $1.4 billion settlement to resolve a civil action filed in November 2018 related to the Swiss-headquartered bank’s underwriting and issuance of residential mortgage-backed securities (RMBS) issued in 2006 and 2007.
The settlement is the last case brought by the U.S. Department of Justice Working Group that focused on the conduct of financial institutions in creating and issuing RMBS in the period before the 2008 financial crisis. The Working Group alleged UBS defrauded investors in connection with the sale of 40 RMBS issued in 2006 and 2007, with the bank intentionally making false and misleading statements to buyers. The allegations claimed UBS ran afoul of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) and veered into violations of the legislation’s mail, wire, and bank fraud statutes.
“With this resolution, UBS will pay for its conduct related to its underwriting and issuance of residential mortgage-backed securities,” said Breaon Peace, U.S. Attorney for the Eastern District of New York. “The substantial civil penalty in this case serves as a warning to other players in the financial markets who seek to unlawfully profit through fraud that we will hold them accountable no matter how long it takes.”
UBS issued a press statement acknowledging the settlement but offered no further comment on the matter.
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