Appeals court revives U.S. case against UBS over CDO fraud

By

A New York state appeals court on Tuesday revived a lawsuit accusing UBS AG [UBSN.VX] of fraudulently causing $331 million of losses from collateralized debt obligations issued before the financial crisis.

Loreley Financing, a group of special-purposes entities based in Jersey in the Channel Islands, brought the lawsuit in 2012 over four CDOs arranged by UBS. The CDOs were comprised of residential mortgage-backed securities and credit default swaps.

When the housing market crashed, Loreley suffered huge losses and claimed UBS had misrepresented the CDOs, which it bought in 2006 and 2007.

Last year, a New York state judge tossed the lawsuit against the Swiss bank, saying in part that Loreley had not shown the alleged misrepresentations caused the losses.

But New York's Appellate Division, First Department reinstated the fraud claim, citing its recent decisions in similar lawsuits Loreley had brought against Citigroup Inc C.N and Bank of America Corp's BAC.N Merrill Lynch unit.

"The First Department's decision is consistent with established case law holding that loss causation is an issue for trial," Sheron Korpus, a lawyer for Loreley, said in a phone interview.

Richard Rosen, a lawyer for UBS, declined to comment.

The case is Loreley Financing (Jersey) No. 4 Ltd et al v UBS Ltd et al, New York State Supreme Court, Appellate Division, 1st Department, Nos. 13636, 13636A, 13636B, 13637.

Tags
New York, UBS, Citigroup, Bank of America
Join the Discussion
More News
Elizabeth Ferguson

Texas Woman Viciously Bludgeoned in Random Lunchtime Attack Breaks Silence: 'Those Entire Two Days are Completely Gone'

Elon Musk

Election Officials Call Elon Musk a 'Huge Problem' For His Role in Spreading Misinformation Ahead of Election Day

Man Fed Up with Sister Cleaning His Room Gets Court

Man Fed Up with Sister Cleaning His Room Gets Court to Make Her Stop

Candace Craig and Salia Hardy

Maryland Woman Reveals Mom's Sick Plot to Dispose of Dismembered Grandma's Body Using Chainsaw and A Grill

Real Time Analytics