US sues Swiss bank UBS over mortgage securities before financial crisis

World
Europe

The US Justice Department sued the Swiss banking giant UBS on Thursday, alleging that its fraudulent actions in the sale of residential mortgage-backed securities led up to the 2008 financial crisis.

The department said UBS misled US and global investors about the quality of billions of dollars in subprime and other mortgage loans that were used to back 40 residential mortgage-backed securities deals from 2006 to 2007.

"UBS affirmatively misled investors and withheld crucial information from them about the loans in its deals," said US Attorney Byung J. Pak in a press release. "These practices resulted in massive losses to investors, harmed homeowners, and ultimately jeopardized the banking system."

In a statement released on its website, the world's biggest wealth manager said it will contest the complaint "vigorously," and it is "confident in its legal position" and "has been fully prepared for some time to defend itself in court."

The bank said UBS itself was a victim, suffering "massive losses" on US mortgage-related assets when the housing market collapsed, and it wasn't a major originator of US residential mortgages.

The justice department didn't specify the damages it was seeking from UBS. In recent years, it has settled similar claims with several big banks, including Citigroup Inc., Deutsche Bank AG, JPMorgan Chase & Co and Credit Suisse Group AG, among others, with penalties of billions of dollars.

Source(s): Xinhua News Agency