UBS to pay $1.44B in US Department of Justice settlement

UBS has agreed to pay $1.44 billion to settle a Justice Department case tied to the issuance of residential mortgage-backed securities in the buildup to the 2008-09 financial crisis, Report informs referring to MarketWatch.

The agreement concludes the last outstanding case brought by the US government against major banks, an initiative that collected $36 billion in settlements from nearly 20 financial institutions, according to the DOJ.

Those banks included JPMorgan Chase, Bank of America, Wells Fargo, Goldman Sachs, Morgan Stanley and Citigroup.

In a regulatory statement, the Swiss-based UBS confirmed it would pay the settlement “to resolve all civil claims by the DOJ in connection with UBS’s legacy RMBS [residential mortgage-backed securities] business in the US.” The settlement has been fully provisioned in prior periods, the bank said.

The complaint by the US alleged that UBS defrauded investors in connection with the sale of 40 residential mortgage-backed securities issued in 2006 and 2007.

“The complaint alleged that UBS knowingly made false and misleading statements to buyers of these securities relating to the characteristics of the mortgage loans underlying the RMBS,” the complaint said.

These actions allegedly violated the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA).