UBS agrees $50m settlement with US regulators over CDO fraud allegations

UBS has agreed to pay $49.8m (£32.45m) to settle charges it misled investors in relation to a mortgage bond transaction structured in 2007 before the financial crisis (release).

The US Securities and Exchange Commission (SEC) said the Swiss Bank was charged with violating securities laws while structuring and marketing a collateralised debt obligation (CDO) by failing to disclose it retained $26.3m in upfront cash in addition to a disclosed fee of $10.8m received over the course of acquiring capital for the CDO.

UBS has agreed to pay back the $23.6m in upfront payments as well as the disclosed fee of $10.8 million, plus prejudgment interest of around $9.7m and a penalty of $5.7m.

UBS has neither admitted nor denied the SEC’s findings.

The fine pales in comparison to the $885m paid in a settlement with US housing regulators over allegations it misrepresented mortgage-backed bonds during the housing bubble.