Swiss-based bank UBS’ announcement that the Department of Justice (DOJ) was preparing a civil action
related to 40 residential mortgage-backed securities (RMBS) deals from 2006 through 2007 came to fruition sooner than later.
The DOJ filed a lawsuit in federal court for the Eastern District of New York claiming UBS violated the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 based on mail fraud, wire fraud, bank fraud and other misconduct in relation to its RMBS activities. U.S. Attorney Richard P. Donoghue stated that investors in these securities “suffered catastrophic losses, which not only caused direct harm to those investors, but also contributed to the financial crisis of 2008.”
“The filing of this complaint makes clear that we will continue to hold financial institutions fully accountable for their conduct and will aggressively pursue financial fraud,” Donoghue added.
UBS issued a statement yesterday
dismissing the DOJ’s claims as “not supported by the facts or the law,” adding that it would “contest any such complaint vigorously in the interest of its shareholders.”