UBS to pay $1.4 billion over fraud in residential mortgage-backed securities – By Rohan Goswami (CNBC) / Aug 14, 2023
- UBS will pay a $1.4 billion settlement over “legacy” misconduct related to the bank’s offer and sale of residential mortgage-backed securities, federal prosecutors said.
- It’s the final case brought by prosecutors over misconduct by the big banks.
- The Justice Department alleged that the banks knew the mortgages underneath the securities were problematic or noncompliant but sold them anyway.
Swiss bank UBS agreed to pay a combined $1.4 billion in civil penalties over fraud and misconduct in its offering of residential mortgage-backed securities dating back to the global financial crisis, federal prosecutors announced Monday.
The bank, in its own statement Monday, described the settlement as dealing with a “legacy matter” dating from 2006 to 2007, leading up to the financial crisis.
The settlement concludes the final case brought by the U.S. Department of Justice against several of the largest financial institutions over misleading statements made to the purchasers of those mortgage-backed securities. The cumulative recoveries in the cases now total $36 billion, according to the Justice Department.
UBS’ settlement is nearly the same as the value of the residential mortgages it originated between 2005 and 2007, the year it stopped issuing residential mortgage-backed securities. UBS originated $1.5 billion in residential mortgages in those three years, the bank previously said in a 2018 statement challenging the Justice Department allegations.
