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Press Release

UBS Agrees to Pay $1.435 Billion to Resolve Claims That It Made Misrepresentations in the Sale of Residential Mortgage-Backed Securities

For Immediate Release
U.S. Attorney's Office, Eastern District of New York
Settlement Brings Total Amount of Civil Penalties Paid by Banks, Originators, and Ratings Agencies for Such Securities to Over $36 Billion

BROOKLYN, NY – UBS AG and several of its U.S.-based affiliates (together, “UBS”) have agreed to pay $1.435 billion in penalties to settle a civil action filed in November 2018 alleging misconduct related to UBS’ underwriting and issuance of residential mortgage-backed securities (RMBS) issued in 2006 and 2007.  UBS will pay the United States $1,435,000,000 in civil penalties in exchange for dismissal of the complaint filed in the action.  This settlement resolves the last case brought by a Department of Justice Working Group dedicated to investigating conduct of banks and other entities for their roles in creating and issuing RMBS leading up to the 2008 financial crisis.  

Following an extensive investigation, the United States filed a complaint alleging that UBS defrauded investors in connection with the sale of 40 RMBS issued in 2006 and 2007.  The complaint alleged that UBS knowingly made false and misleading statements to buyers of these securities relating to the characteristics of the mortgage loans underlying the RMBS in violation of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, 12 U.S.C. § 1833a (FIRREA).  The FIRREA claims were based on alleged violations of the mail, wire, and bank fraud statutes, as well as 18 U.S.C. §§ 1005 and 1014. 

Breon Peace, United States Attorney for the Eastern District of New York; Vanita Gupta, United States Associate Attorney General; Brian M. Boynton, Principal Deputy Assistant Attorney General of the Justice Department’s Civil Division; Ryan K. Buchanan, United States Attorney for the Northern District of Georgia, and Brian M. Tomney, Inspector General for the Federal Housing Finance Agency (FHFA) announced the settlement.

“With this resolution, UBS will pay for its conduct related to its underwriting and issuance of residential mortgage-backed securities.  The substantial civil penalty in this case serves as a warning to other players in the financial markets who seek to unlawfully profit through fraud that we will hold them accountable no matter how long it takes,” stated United States Attorney Peace.  “The over $36 billion collected for conduct that fueled the 2008 financial crisis reflects the Department of Justice’s deep commitment to protecting financial markets, investors and the public against fraudulent conduct.”

Mr. Peace expressed his appreciation to the Office’s partners at the United States Attorney’s Office for the Northern District of Georgia (NDGA), and to the Federal Housing Finance Agency-Office of the Inspector General for its assistance in the government’s case. 

“In the wake of the 2008 financial crisis, people all across the country experienced financial ruin and emotional devastation, and many are still recovering nearly 15 years later,” stated Associate Attorney General Gupta. “As this settlement demonstrates, the department and our partner agencies remain committed to holding accountable those who break the law and undermine the well-being of American families.”

“The results achieved by the RMBS Working Group are a testament to the exceptional dedication and hard work by department attorneys over many years,” stated Principal Deputy Assistant Attorney General Boynton.  “We are grateful for the outstanding support provided by our partners in federal agencies and states that similarly sought to hold responsible those entities that contributed to the 2008 financial crisis.”

“This settlement represents accountability for those entities and individuals who mistakenly believed themselves to be above the law,” stated U.S. Attorney NDGA Buchanan.  “UBS’ conduct in this case played a significant role in causing a financial crisis that harmed millions of Americans.  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. We are thankful for the collective efforts of our partners at the U.S. Attorney’s Office for the Eastern District of New York and the investigative agencies to bring this case to resolution.”

“The FHFA Office of Inspector General, together with our RMBS Working Group partners, investigated and held accountable those who sought to victimize Fannie Mae, Freddie Mac and investors by selling fraudulent mortgage-backed securities,” stated FHFA Inspector General Tomney.  “We appreciate our longstanding partnership with the Department of Justice and its vigorous pursuit of justice in this case.”

The government’s complaint alleged that contrary to UBS’ representations in publicly filed offering documents, UBS knew that significant numbers of the loans backing the RMBS did not comply with loan underwriting guidelines that were designed to assess borrowers’ ability to repay.  The complaint further asserted that UBS knew that the property values associated with a significant number of the securitized loans were unsupported, and that significant numbers of the loans had not been originated in accordance with consumer protection laws.  UBS was allegedly aware of these significant problems because it had conducted extensive due diligence on the underlying loans prior to the RMBS being issued to determine whether the loans were consistent with representations that would be made to investors.  Ultimately, the 40 RMBS sustained substantial losses. 

With the UBS settlement announced today, the Department of Justice has collected more than $36 billion in civil penalties from 18 major domestic and foreign banks, originators, and rating agencies for their alleged conduct in connection with mortgages securitized in failed RMBS leading up to the 2008 financial crisis.  These resolutions include settlements with eighteen banks, mortgage originators, and rating agencies:  Ally Financial; Aurora Loan Services; Bank of America; Barclays; Citigroup; Credit Suisse; Deutsche Bank; General Electric; Goldman Sachs; HSBC; JPMorgan; Moody’s; Morgan Stanley; Nomura; Royal Bank of Scotland; S&P; Société Générale; and Wells Fargo.   

Collectively, these matters were handled by 11 U.S. Attorney’s Offices and the Civil Division of the Department of Justice, in conjunction with the RMBS Working Group.  The RMBS Working Group was a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that led to the financial crisis.  Formed in 2012, the RMBS Working Group brought together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies, including the FHFA Office of Inspector General, the Department of Housing and Urban Development, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Securities and Exchange Commission and the FBI, to investigate financial fraud in RMBS. 

The UBS case is the last RMBS Working Group case resolved by the U.S. Attorney’s Office of the Eastern District of New York. In six cases the Office and its partners recovered over $11 billion in penalties.  The Office thanks its many partners, current and former Assistant U.S. Attorneys, and professional staff for their work on this important Departmental initiative.

 The claims resolved in the settlement are allegations only and there has been no determination of liability. 

The matter involving UBS was handled by the United States Attorneys’ Offices for the Eastern District of New York and the Northern District of Georgia, with the support of agents from FHFA-OIG.  Assistant United States Attorneys Bonni J. Perlin, Michael J. Castiglione, Richard K. Hayes, Edward K. Newman and Melanie Speight from the Eastern District of New York, and Austin M. Hall, Andres H. Sandoval, and former Assistant United States Attorney Armen Adzhemyan from the Northern District of Georgia were in charge of the litigation. 

E.D.N.Y. Docket No. 18-CV-6369 (RPK) (PK)


John Marzulli
Danielle Blustein Hass
United States Attorney's Office
(718) 254-6323

Updated August 14, 2023

Financial Fraud
Mortgage Fraud