Friday, September 7, 2012

NCUA Sues UBS Securities

The National Credit Union Administration (NCUA) is suing UBS Securities over the sale of more than $1.1 billion of mortgage-backed securities to U.S. Central Federal Credit Union (US Central) and Western Corporate Federal Credit Union (WesCorp). Both corporate credit unions subsequently failed.

The lawsuit, which was filed in Federal District Court in Kansas, alleges UBS Securities violated federal and state securities laws. NCUA argues that UBS Securities made numerous misrepresentations and omissions of material facts in the offering documents of the securities sold to the failed corporate credit unions.

The complaint also claims systemic disregard of the underwriting guidelines stated in the offering documents.

These misrepresentations caused US Central and WesCorp to believe the risk of loss was minimal.

In its complaint, NCUA requested a jury trial.

NCUA has filed five similar lawsuits against J.P. Morgan Securities, LLC, RBS Securities, Goldman Sachs, and Wachovia. In addition, the agency has settled claims worth more than $170 million with Citigroup, Deutsche Bank Securities, and HSBC.

Read the press release. Read the complaint.

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