UBS Securities LLC

NCUA Enters $445 Million Settlement with UBS in Lawsuit Alleging Untrue Statements in Connection with Sale of RMBS

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On April 25, 2017, the National Credit Union Administration (“NCUA“), as liquidating agent for U.S. Central Federal Credit Union and Western Corporate Federal Credit Union, voluntarily dismissed its complaint against UBS Securities, LLC (“UBS“) and Mortgage Asset Securitization, Inc., in the United States District Court for the District of Kansas following a settlement between the parties. Under the terms of the settlement, UBS agreed to pay $445 million to end the NCUA’s five-year old lawsuit (the filing of the lawsuit was covered here). The NCUA’s suit involved claims for losses suffered by the two failed credit unions from allegedly untrue statements and omissions of fact by UBS regarding RMBS that it underwrote and sold. This settlement is in addition to the $79.3 million the NCUA also recovered from UBS in April 2016 for RMBS losses suffered by two other defunct credit unions. Voluntary Dismissal.

National Credit Union Administration Board Accepts UBS Securities LLC Offer of Judgment

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On February 25, the National Credit Union Administration Board (“NCUA”) accepted an offer of judgment tendered by UBS Securities LLC (“UBS”) in the amount of $33,014,285 plus prejudgment interest, which will be calculated by the court. NCUA and UBS will attempt to agree on costs and fees also to be paid by UBS.  Acting as the liquidating agent for Southwest Corporate Federal Credit Union and Members United Corporate Federal Credit Union, NCUA’s complaint alleged that UBS made material misstatements in connection with the sale of 20 RMBS certificates, alleging more than $918 million in actual gross losses.  UBS specified in the offer of judgment that its offer should not be construed as an admission of liability. Offer of Judgment. Complaint.

Federal Court Grants in Part UBS and JP Morgan Motions to Dismiss RMBS Suits

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On September 3, Judge John W. Lungstrum of the United States District Court for the District of Kansas granted in part and denied in part motions to dismiss by UBS Securities LLC and JP Morgan Securities LLC in four separate actions brought by the National Credit Union Administration (NCUA), as liquidator of certain failed credit unions.  In each action, NCUA alleged that the defendants made misrepresentations and omissions in RMBS offering documents concerning, among other things, the loan-to-value ratios of the underlying loans and the underwriting guidelines used to originate those loans.  In the action against UBS, the Court dismissed claims as to 10 of the 22 certificates at issue as time barred, ruling that the federal Extender Statute may not be extended by a tolling agreement.  Order.  In the action against JP Morgan, the Court granted the motion to dismiss with leave to amend as to two certificates backed by loans originated by entities as to which NCUA had failed to make any allegations.  Order.  In the action against JP Morgan as successor to Washington Mutual, the Court dismissed claims as to 31 of the 49 certificates at issue as time barred, also due to the inability of the Extender Statute to be extended by tolling agreement.  The court rejected, however, JP Morgan’s argument that NCUA was required to exhaust its claims administratively through the FDIC, as receiver for WaMu, prior to filing suit, holding that the claims could not have been brought administratively against the FDIC because JP Morgan had assumed WaMu’s liabilities.  Order.  Finally, in the action against JP Morgan as successor to Bear Stearns, the Court dismissed claims as to 37 of the 83 certificates at issue as time barred, also due to the inability of the Extender Statute to be extended by tolling agreement.  The Court rejected, however, JP Morgan’s statute of limitations-based arguments concerning the remaining certificates.  Order.