UBS will be required to pay a settlement of $1.4 billion concerning its former transgressions in relation to the offering and sale of residential mortgage-backed securities, federal prosecutors declared. This is the last instance of misconduct brought against the key banking entities. The Justice Department declared that the finance institutions were aware that the loans underpinning the securities were either faulty or ineligible, yet still sold them.
UBS, a Swiss bank, has agreed to pay out a total of $1.4 billion in civil penalties to resolve allegations of fraud and misconduct related to its offering of residential mortgage-backed securities (RMBS) leading up to the global financial crisis. UBS's settlement is almost equivalent to the amount of residential mortgages it originated between 2005 and 2007.In 2018, UBS had defended itself, pointing out that the majority of the mortgages underlying these RMBS were created by other financial institutions.The US Department of Justice has been successful in obtaining settlements from 18 financial firms including Bank of America, Citigroup, General Electric, Goldman Sachs, JPMorgan and Wells Fargo, and from Credit Suisse – the now defunct Swiss bank that is owned by UBS. In the instances of all these firms, the securities were rated and graded with various tranches of mortgages supposedly protecting against the risk of default, when the truth was that the mortgages did not adhere to set standards.The cumulative recoveries in the current cases have totaled $36 billion.
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