UBS to Pay Over $1 Billion to Settle Fraud Claims

It became known that the Swiss bank UBS agreed to pay $ 1.4 billion as part of the settlement of claims of involvement in fraudulent activities in the United States, which became a kind of premise of the financial crisis that broke out in 2008.

UBS to Pay Over $1 Billion to Settle Fraud Claims

The approval of this settlement marks the completion of the investigation of cases that were initiated by the United States Attorney’s Office in the context of efforts to clarify the circumstances and motives of the activities of financial institutions in anticipation of the rapid and large-scale deterioration of the economic situation that triggered the global recession.

The prosecutor’s office claimed that UBS had lied in response to a request about the quality of mortgages that were issued and sold by investors during a series of transactions in 2006-2007. The financial institution did not recognize the legitimacy of these accusations. At the same time, the bank did not provide any refutation of the prosecutor’s statement.

The lender announced the allocation of money to resolve the issue of inheritance. The financial institution also stated that the settlement deal would resolve all civil lawsuits in the United States. The previous position of the bank, which existed within the framework of the proceedings, was unambiguous in terms of recognizing its own innocence. The financial institution claimed that the prosecutor’s office had not provided any evidence of deliberate fraud.

Prosecutors from the United States in the lawsuit, which was filed in 2018, stated that the lender misled investors more than a decade ago concerning the sale of mortgage-backed securities.

Ryan K. Buchanan, United States Attorney for the Northern District of Georgia, says that the tactics of the bank’s behavior largely contributed to the deterioration of the economic system, becoming one of the factors of the financial crisis, which resulted in damage to millions of Americans. He also said that the scale of this settlement should be a warning to other creditors, regardless of their size. The Prosecutor noted that this example demonstrates the inevitability of punishment, including in the form of large penalties, in cases where financial institutions distort vital information for investors and contribute by their actions to reducing the level of confidence in the public markets of the United States.

UBS became the eighteenth organization to reach an agreement in the USA as part of the proceedings on its role in the context of the 2008 financial crisis. Currently, this lender is one of the main investment banks in the world.

As part of the conclusion of agreements on the settlement of situations related to actions on the eve of a large-scale and deep economic downturn, decisions were made on penalties in the total amount of more than $36 billion. The world’s largest banks, rating agencies, and others took part in this process.

American financial institutions, including JP Morgan and Bank of America, have agreed to pay much larger amounts compared to the fine against UBS.

The involvement of global banks in mortgage lending activities, which are very problematic, according to experts, was the main factor in the financial crisis in 2008. This crisis has caused a sharp decline in the global economy. During this unfavorable period, the United States experienced the most serious decline since the Great Depression of the 30s of the last century.

Unforeseen losses related to loans caused tension in the economic system and provoked the collapse of several major financial institutions in the United States, including Lehman Brothers.

The prosecutor’s office said that the involvement of banks in illegal mortgage lending has become a kind of basis for the crisis. The negative situation began to scale rapidly about the reason for the active trading of securities that are secured by mortgages.

As we have reported earlier, Federal Reserve Fines UBS.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.