UBS is expecting to get sued by the US Justice Department over crisis-era mortgage securities

https://www.businessinsider.com/ubs-expecting-us-justice-department-lawsuit-over-crisis-era-mortgage-securities-2018-11



UBSReuters

  • UBS says it expects the US Department of Justice to
    bring civil charges against it, relating to the sale of
    mortgage-backed securities in the run-up to the 2008 global
    financial crisis.
  • In a statement, the bank said the claims were not
    supported by the facts or the law and it would contest any such
    complaint “vigorously.”
  • The Justice Department has already settled similar
    claims with Citigroup, Deutsche Bank, JPMorgan, Credit Suisse,
    Morgan Stanley, Goldman Sachs, Bank of America and
    Barclays.

UBS, Switzerland’s largest bank, said it expects to be sued by
the US Department of Justice as early as Thursday on civil
charges related to the sale of mortgage-backed securities in the
run-up to the 2008 global financial crisis.

In a statement, the bank said the claims were not supported by
the facts or the law and it would contest any such complaint
“vigorously.”

The U.S. Department of Justice did not immediately respond to a
request for comment.

UBS said the Justice Department advised the bank that it intends
to file the lawsuit. It anticipates the Justice Department will
seek unspecified monetary penalties stemming from mortgage
securities which date back to 2006 and 2007. 

The lawsuit against UBS, a small originator of US residential
mortgages at the time, is among the last actions over misconduct
in the sale and pooling of mortgage securities which helped to
cause the financial crisis.

In recent years, the Justice Department has settled similar
claims with Citigroup, Deutsche Bank, JPMorgan, Credit Suisse,
Morgan Stanley, Goldman Sachs, Bank of America and Barclays.

Barclays settled for $2 billion in March after resisting a
penalty the US government sought near the end of the Obama
administration in 2016. Justice had sought a much higher fine at
the time and, when the two sides could not come to terms, the
department filed a lawsuit.

More recently, HSBC agreed to pay $765 million in October to
settle with the Justice Department over its sale of defective
mortgage securities before the crisis, while major player Royal
Bank of Scotland reached a $4.9 billion deal in May.

After the crisis, banks were accused of deceiving investors about
the quality of loans underlying the mortgage-backed securities
they pooled and sold, with loans made to borrowers with no
ability to repay them and based on inflated home appraisals.

UBS, which originated $1.5 billion of US residential mortgages in
a $5 trillion market, lost more than $45 billion when the housing
market collapsed, a person familiar with the matter told Reuters.