UBS is paying $1.44 billion to settle the Justice Department’s subprime lending fraud allegations

UBS agreed to pay $1.435 billion to settle US allegations that the Swiss lender misled investors into buying distressed mortgage securities, closing an industry-wide probe into a root cause of the 2008 global financial crisis.

The Justice Department announced Monday that it had collected more than $36 billion in civil fines from 19 banks, mortgage lenders and rating agencies for packaging, selling and grading securities backed by residential property in the run-up to the crisis.

Many of these securities were triple-A rated despite being backed by subprime and other risky mortgages, and investors suffered huge losses as borrowers defaulted and underwriting flaws became apparent.

The largest $16.65 billion deal was reached in 2014 with Bank of America, which had bought mortgage specialist Countrywide Financial six years earlier.

The UBS settlement settled allegations by the Justice Department in a 2018 lawsuit filed in Brooklyn that the bank had defrauded investors by knowingly making false and misleading claims about more than $41 billion in loans, the 40 RMBS from the years 2006 and 2007 secured.

UBS sign
The Justice Department’s civil complaint was filed in November 2018 alleging wrongdoing in connection with UBS’s 2006 and 2007 acquisition and issuance of residential real estate-backed securities.
Christopher Sadowski

House for sale
UBS has been accused of knowingly providing false and misleading information to buyers of these residential property-backed securities.
Christopher Sadowski

The bank turned down a proposal to pay nearly $2 billion for the settlement, a person familiar with the matter said at the time.

Credit Suisse, which bought UBS in June, achieved a similar result Settled over $5.28 billion in 2017.

In a press release, UBS said it had previously set aside reserves to cover the $1.43 billion payout. Monday’s settlement should see the lawsuit dismissed.

UBS’s payout is “a warning to other players in the financial markets who seek illegitimate profits through fraud that we will hold them accountable no matter how long it takes,” US Attorney Breon Peace said in a statement in Brooklyn.


DUSTIN JONES is a USTimeToday U.S. News Reporter based in London. His focus is on U.S. politics and the environment. He has covered climate change extensively, as well as healthcare and crime. DUSTIN JONES joined USTimeToday in 2021 from the Daily Express and previously worked for Chemist and Druggist and the Jewish Chronicle. He is a graduate of Cambridge University. Languages: English. You can get in touch with DUSTIN JONES by emailing

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