The National Credit Union Administration (NCUA) has filed suit in Federal District Court in Kansas against UBS Securities, alleging the investment giant violated federal and state securities laws through misrepresentations in the sale of mortgage-backed securities to U.S. Central Federal Credit Union and Western Corporate Federal Credit Union.
NCUA's complaint alleges UBS Securities made numerous misrepresentations and omissions of material facts in the offering documents of the securities sold to the corporate credit unions. The complaint also alleges systemic disregard of the underwriting guidelines stated in the offering documents. These misrepresentations caused the credit unions to incorrectly believe the risk of loss was minimal, the NCUA states. Both credit unions later failed.
‘The strength of our entire financial system relies on trust and accountability,’ says NCUA Board Chairman Debbie Matz. ‘As our complaint makes clear, UBS Securities violated this trust, which contributed to the collapse of two corporate credit unions and the resulting crisis in the credit union industry. NCUA has worked to restore stability to the credit union system. Now we intend to hold UBS Securities, as well as other responsible parties, accountable.’