UBS Group said it agreed to pay $1.44 billion to settle a case with the Department of Justice regarding how it handled residential mortgage-backed securities.
The matter stems from 2006 and 2007 and relates to the issuance, underwriting and sale of the securities, UBS said in a statement Monday.
In 2019, a federal judge in Brooklyn, New York, denied UBS’s bid to dismiss the suit, which the DOJ brought in 2018. It accused the bank of selling tens of billions of dollars of residential mortgage-backed securities by “knowingly and repeatedly” making false and fraudulent statements to investors about the loans backing them.
UBS argued the suit should be dismissed because it failed to allege sufficient facts to show motive, opportunity or “deliberately illegal behavior.” The bank also argued that the U.S. failed to show “fraudulent intent” of any employees.
But U.S. Judge Margo Brodie in Brooklyn ruled the case should go forward, saying the government’s complaint “alleges strong circumstantial evidence of conscious misbehavior or recklessness.”
The agreement resolves all civil claims by the DOJ linked to the Swiss bank’s legacy RMBS business in the U.S., the company said in Monday’s statement. The settlement has been fully provisioned, according to the bank.
“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,” Ryan Buchanan, U.S. attorney for the Northern District of Georgia, said in a separate statement Monday.
Elsewhere, Wells Fargo Advisors adds a $400 million Morgan Stanley veteran in Naples as an ex-Cetera advisor goes independent with LPL
According to a federal charges Bradley Heppner, 60, received more than $150 million in payments through funneling money from GWG Holdings to a shell company.
A $1B fund allegedly skimmed 30% off the top, then swapped cash for locked-up stock.
Insiders allegedly rewrote projections three times in four days.
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