UBS Securities

FDIC Settles RMBS Litigation for $190 Million with U.S. Financial Institutions

On May 26, 2016, the FDIC reached a $190 million settlement of RMBS claims against eight financial institutions, including Barclays Capital Inc.; Deutsche Bank Securities Inc.; Goldman, Sachs & Co; RBS Securities Inc.; and UBS Securities LLC. The settlement resolves six separate suits brought in 2011 and 2012 in California and Alabama alleging misrepresentations within the defendant underwriters’ RMBS offering documents.  The FDIC, as a receiver, will distribute the settlement funds among five failed bank receiverships.  FDIC Settlement Agreement.

Securities Claim Against UBS Based on RMBS Credit Ratings Allegations Revived

On July 22, Judge Denise Casper of the United States District Court for the District of Massachusetts permitted plaintiff Capital Ventures International to pursue Massachusetts Uniform Securities Act claims against UBS Securities, LLC alleging that UBS made misrepresentations concerning credit ratings in connection with over $109 million in RMBS.  The court had previously dismissed these claims, but permitted Capital Ventures to amend them, and UBS again moved to dismiss.  Despite its conclusion that credit ratings are statements of opinion, the court held that Capital Ventures could pursue MUSA claims relating to those ratings because the complaint adequately alleged that UBS did not subjectively believe the opinions reflected by the credit ratings when it included them in the offering documents at issue.  Specifically, Capital Ventures alleged that UBS knew the data regarding the loans on which the ratings allegedly were premised was faulty, and therefore could not have believed the ratings that were issued.  Order.

Massachusetts District Court Grants UBS’s Motion to Dismiss Credit Rating Allegations

On September 28, Judge Denise J. Casper of the federal district court for the District of Massachusetts granted in part and denied in part UBS Securities’s motion to dismiss a complaint concerning its sale of more than $109 million worth of RMBS.  The court concluded that plaintiff Capital Ventures International, an alleged purchaser of the securities, had adequately pleaded that the offering materials contained misstatements and omissions regarding underwriting guidelines, owner-occupancy rates, appraisals, and loan-to-value ratios.  Judge Casper granted, however, UBS’s motion to dismiss as to allegations that either the credit rating agencies or defendants knew that the credit ratings assigned to the securitizations at issue were unjustified.  The Court also dismissed claims against non-underwriter defendants, who the Court determined did not constitute statutory sellers, and held that the control person allegations were insufficient to state a claim.  Decision.