UBS and Credit Suisse Settle Mortgage-Backed Securities Cases With for $445M and $400M, Respectively

UBS Group AG (UBS) has paid the National Credit Union Administration $445M to settle claims brought on behalf of Western Corporate Federal Credit Union and U.S. Central Federal Credit Union, which both failed after they sustained losses from residential mortgage-backed securities they purchased through the broker-dealer.The two credit unions went into conservatorship several years ago and have since shut down.

UBS settled this latest case without denying or admitting to wrongdoing. The lender had previously paid NCUA $79.3M to resolve similar allegations involving two other credit unions that also failed. With that settlement, the bank also did not deny or admit wrongdoing.

To date, NCUA has recovered nearly $5B in settlements from big banks related to the faulty securities that they sold to corporate credit unions.

Credit Suisse Settles With NCUA, Too
Credit Suisse Group AG (CS) also recently settled with NCUA paying $400M over toxic mortgage securities it sold that played a part in the failure of credit unions Southwest Corporate, Western Corporate, and US Central. The claims accuse the Swiss bank of misleading the credit unions about the risks involved in $715M of RMBS purchased between 2005 and 2007. Last year, Credit Suisse settled a separate lawsuit brought by NCUA for $50.3M.

Even though it is settling, Credit Suisse is not denying to or admitting wrongdoing.

In other recent residential mortgage-backed securities fraud news, the US Securities and Exchange Commission ordered Barclays (BARC) to pay more than $16.5M for failing to properly supervise two of its ex-traders. They are accused of making false and misleading statements to customers, as well as making excessive markups. The men’s alleged wrongdoing gave Barclays $15.5M in profits. You can read more about that case here. The two ex-Barclays traders, Yoon Seok Lee and David Wong, were suspended from working in the securities industry and will pay fines.

Meantime, three ex-Nomura Securities International (NMR) traders are about to go to trial in the criminal case against them. Michael A. Gramins, Ross B. Shapiro, and Tyler G. Peters are charged with securities fraud and conspiracy. They also are accused of misleading buyers about bonds.

The indictment against the three men, brought in 2015, contends that they conspired to bilk Nomura customers by fraudulently inflating the price at which the bank could purchase an RMBS so as to get customers to pay more for the bonds. They also are accused of fraudulently deflating the price at which the bank could sell such a bond to get victims to sell them at lower prices. As a result, Nomura and the three men would have made money, albeit illegally.

RMBS Fraud Cases
Our residential mortgage-fraud securities law firm works with investors, including high net worth individual investors and institutional clients, in trying to recoup their losses caused by securities fraud, negligence, or other wrongdoing. If you contact The SSEK Partners Group, an experienced RMBS fraud lawyer can help you explore your options during a free, no obligation case consultation.

NCUA Recovers $445 Million in UBS Suit, NCUA, May 1, 2017

Credit Suisse pays $400 million over toxic mortgages, failed U.S. credit unions, Reuters, May 3, 2017