UBS to pay $1.43bn in penalties over mortgage fraud prior to 2008 crisis | UBS [wafact]

Banking group UBS has agreed to pay $1.43bn in penalties to settle a civil action alleging fraud in the sale of residential mortgage-backed securities ahead of the 2008-09 financial crisis, the company and the US justice department said on Monday.

The civil action was filed in November 2018 alleging misconduct related to UBS’s underwriting and issuance of residential mortgage-backed securities (RMBS) issued in 2006 and 2007, according to the justice department.

“In the wake of the 2008 financial crisis, people all across the country experienced financial ruin and emotional devastation, and many are still recovering nearly 15 years later,” said associate attorney general Vanita Gupta.

“As this settlement demonstrates, the department and our partner agencies remain committed to holding accountable those who break the law and undermine the well-being of American families.”

The United States had filed a complaint alleging that UBS defrauded investors in connection with the sale of 40 RMBS issued in 2006 and 2007. It alleged that UBS knowingly made false and misleading statements to buyers of those securities.

UBS on Monday said it reached the deal with the justice department to settle what the bank called a “legacy matter” from 2006-07.

The settlement resolves the last case brought by a justice department working group dedicated to investigating conduct of banks and other entities for their roles in creating and issuing RMBS leading up to the 2008 financial crisis, the justice department said.

The cumulative recoveries in the cases now total $36bn, according to the justice department. Only one US banker has been jailed on charges related to the 2007-08 crisis.

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