On September 6, 2012, the National Credit Union Administration Board (NCUA) sued UBS in the United States District Court for the District of Kansas. The NCUA filed the suit in its capacity as Liquidating Agent of U.S. Central Federal Credit Union and Western Corporate Federal Credit Union, which collectively are alleged to have purchased over $1.1 billion in RMBS from UBS. The complaint alleges that the originators of the mortgages collateralized into the RMBS had “systematically abandoned” the underwriting guidelines described in the offering documents. The NCUA also alleges that the offering documents contained untrue statements of material fact concerning weighted average LTV ratios, the evaluation of the borrowers’ capacity and likelihood to repay the mortgage loans, and the reduced documentation programs used by the originators. The NCUA asserts claims under Sections 11 and 12(a)(2) of the Securities Act of 1933, Sections 25401 and 25501 of the California Corporate Securities Law, and the Kansas Uniform Securities Act. The NCUA seeks rescission or rescissionary damages or, in the alternative, compensatory damages. NCUA Complaint.
