UBS AG, RMBS Misrepresentation, New York 2023

BROOKLYN, NY – In a landmark case, UBS AG and several of its U.S.-based affiliates have agreed to pay $1.435 billion in penalties to settle claims that they made misrepresentations in the sale of residential mortgage-backed securities (RMBS) issued in 2006 and 2007.

The settlement resolves the last case brought by a 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. UBS will pay the United States $1,435,000,000 in civil penalties in exchange for dismissal of the complaint filed in the action.

Following an extensive investigation, the United States filed a complaint alleging that UBS defrauded investors in connection with the sale of 40 RMBS 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 in violation of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, 12 U.S.C. § 1833a (FIRREA).

The FIRREA claims were based on alleged violations of the mail, wire, and bank fraud statutes, as well as 18 U.S.C. §§ 1005 and 1014. Breon Peace, United States Attorney for the Eastern District of New York; Vanita Gupta, United States Associate Attorney General; Brian M. Boynton, Principal Deputy Assistant Attorney General of the Justice Department’s Civil Division; Ryan K. Buchanan, United States Attorney for the Northern District of Georgia, and Brian M. Tomney, Inspector General for the Federal Housing Finance Agency (FHFA) announced the settlement.

“With this resolution, UBS will pay for its conduct related to its underwriting and issuance of residential mortgage-backed securities. 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,” stated United States Attorney Peace. “The over $36 billion collected for conduct that fueled the 2008 financial crisis reflects the Department of Justice’s deep commitment to protecting financial markets, investors and the public against fraudulent conduct.”

Mr. Peace expressed his appreciation to the Office’s partners at the United States Attorney’s Office for the Northern District of Georgia (NDGA), and to the Federal Housing Finance Agency-Office of the Inspector General for its assistance in the government’s case. “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,” stated Associate Attorney General 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,” Associate Attorney General Gupta continued. The results achieved by the RMBS Working Group are a testament to the exceptional dedication and hard work by department attorneys over many years, stated Principal Deputy Assistant Attorney General Boynton.

This settlement represents accountability for those entities and individuals who mistakenly believed themselves to be above the law, stated U.S. Attorney NDGA Buchanan. “UBS’ conduct in this case played a significant role in causing a financial crisis that harmed millions of Americans. The scope of this settlement should serve as a warning to other financial institutions – both large and small – of the significant penalties that can result when corporations misrepresent vital information to investors and undermine trust in our public markets,” he added.

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