UBS is paying a hefty price for its involvement in the mortgage-backed securities scandal. The bank has agreed to pay $1.4 billion in the UBS settlement.
This massive fine is a result of UBS's alleged misrepresentations and omissions in its sales of mortgage-backed securities to investors.
The UBS settlement is a significant development in the ongoing efforts to hold financial institutions accountable for their roles in the 2008 financial crisis.
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Settlement Details
The UBS settlement is a complex process, but let's break down the key details. UBS agreed to pay $780 million to settle allegations of tax evasion.
UBS clients were able to avoid paying taxes on their Swiss bank accounts by using offshore entities, making it difficult for the IRS to track the money. This practice was widespread, with over 250 UBS employees involved.
The settlement required UBS to disclose the names of 4,450 U.S. account holders. The IRS used this information to track down and audit these individuals.
Key Takeaways
UBS reached a settlement with the Department of Justice to pay $1.435 billion in a case surrounding the bank's handling of residential mortgage-backed securities (MBS).
The settlement concluded the last DOJ-filed lawsuit aimed at investigating the conduct of big banks and financial firms in the aftermath of the 2008 financial crisis.
The bank will pay a substantial civil penalty for its conduct related to underwriting and issuance of residential mortgage-backed securities.
Credit Suisse, which UBS acquired in March, settled with the DOJ for $5.3 billion in 2017 to resolve a similar lawsuit.
Here are the key details of the settlement:
- $1.435 billion settlement amount
- Residential mortgage-backed securities (MBS) at the center of the case
- 2006 and 2007: the years when the securities were sold
- 40 residential mortgage-backed securities involved in the suit
Sources
- https://www.justice.gov/usao-edny/pr/ubs-agrees-pay-1435-billion-resolve-claims-it-made-misrepresentations-sale-residential
- https://www.justice.gov/opa/pr/ubs-agrees-pay-1435-billion-fraud-sale-residential-mortgage-backed-securities
- https://www.investopedia.com/ubs-forced-to-pay-usd1-4-billion-to-resolve-doj-lawsuit-7643316
- https://www.bankingdive.com/news/ubs-settlement-doj-mortgage-backed-securities-fraud-case/690843/
- https://portal.ct.gov/AG/Press-Releases-Archived/2018-Press-Releases/AG-Jepsen-States-Reach-$68M-Settlement-with-UBS-for-LIBOR-Manipulation
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