UBS Group, the Swiss global financial services firm, has agreed to pay a $1.44-billion fine to settle charges brought by the U.S. justice department that the company had defrauded investors.
U.S. officials alleged that UBS had misrepresented 40 mortgage-backed securities that it sold to investors in 2006 and 2007. The securities’ values crashed when the Great Recession set in.
“UBS knew that significant numbers of the loans backing the [securities] did not comply with loan underwriting guidelines that were designed to assess borrowers’ ability to repay,” the justice department’s complaint said.
UBS’s is the last case brought by a special justice department task force created in 2012 to sue financial firms for improprieties that helped create the financial conditions leading to the Great Recession in 2007.
The task force reached settlements with 19 banks totaling $36 billion in fines. More than half the total, about $17 billion, was paid by Bank of America and $7.2 billion came from Deutsche Bank.
The task force was formed following complaints from legislators and the public that the government was failing to hold Wall Street’s fraudsters to account for knowingly creating and marketing mortgage-backed securities that were likely to lose value.
UBS had pledged to fight the allegations, claiming it, too, had suffered mortgage-related losses totaling about $900 million due to the frauds.
However, it decided to settle the suit so it could focus its resources on absorbing the failed Credit Suisse bank that it agreed to buy last March, the Financial Times reported.
In 2015, German regulators fined Deutsche Bank a then-record $2.5 billion for its part in rigging interbank overnight interest rates. January 2022, the bank paid another $7.7 million in fines for failing to implement safeguards to prevent the same thing from happening again.
In 2016, Wells Fargo was fined $185 million for opening as many as 1.5 million fake bank accounts in customers’ names without them knowing. In 2021, the same bank was fined $250 million for shoddy practices in its mortgage loan operation. In the same year, regulators slapped it with $72.6 million in penalties for “irregularities” in its foreign currency transactions.
In July this year, Bank of America was hit with a $250-million fine by U.S. regulators for opening credit card accounts for customers without their permission and for double-charging some fees.
JPMorgan Chase is part of the gang. In 2020, it paid $920 million in penalties after its gold traders had been found to be rigging the market for years and the bank was charged with five felonies.
In December 2021, the U.S. Securities and Exchange Commission fined the brokerage arm of JPMorgan Chase $125 million, the largest fine ever levied for violations of SEC rules requiring brokerages to document communications and make such records available to regulators.