WASHINGTON, D.C. — The federal government is suing a Swiss investment bank and financial services company https://en.wikipedia.org/wiki/UBS for alleged residential mortgage-backed securities (RMBS) fraud, the U.S. Department of Justice (DOJ) announced.
Through its lawsuit filed in the federal court for the Eastern District of New York, the DOJ alleges UBS and some of its U.S. affiliates deceived investors by "misrepresenting key characteristics of the loans" and is also alleging mail fraud, wire fraud, bank fraud among other charges by UBS.
“The complaint alleges that instead of ensuring that their representations to investors were accurate and transparent, UBS affirmatively misled investors and withheld crucial information from them about the loans in its deals,” U.S. Attorney BJay Pak said in a statement. “UBS allegedly placed a higher priority on selling bonds and making profits than accurately representing the quality of the underlying loans to investors. These practices resulted in massive losses to investors, harmed homeowners, and ultimately jeopardized the banking system.”
“Investors who bought RMBS from UBS suffered catastrophic losses, which not only caused direct harm to those investors, but also contributed to the financial crisis of 2008,” added U.S. Attorney Richard Donoghue.
The DOJ alleges UBS violated the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) through its alleged actions.