The Zurich-headquartered private bank has agreed to pay a $230-million (£162.4-million) settlement to the investors and State of New York in respect of the packaging, marketing, sale, and issuance of residential mortgage-backed securities to investors leading up to the financial crisis.

Attorney General Eric Schneiderman has announced the settlement, which includes $189 million-worth of consumer relief for New York investors and $41 million in cash to New York State.

UBS is the seventh large financial institution to settle with Schneiderman’s office since Barack Obama appointed him as co-chairman of the RMBS (residential mortgage-backed securities) Working Group in 2012. He has now secured $3.93 billion in cash and consumer relief — more than the attorney general of any other state. When combined with the National Mortgage Settlement, the total rises to $6.06 billion.

As part of this settlement, UBS has admitted the findings contained in the statement of facts, has agreed to pay $41 million in cash, and must provide significant community-level relief to New Yorkers, including monies that will contribute to more affordable housing construction. Additional resources will go to land banks. An independent auditor will monitor UBS’s compliance with the consumer relief terms of the settlement.

Based on the evidence uncovered by the Office of the Attorney General during its investigation of UBS, the OAG concluded that, contrary to its representations, UBS sold investors RMBS backed by mortgage loans based on inaccurate statements in prospectus supplements and/or investor presentations for the RMBS. Indeed, many of the mortgage loans did not comply with underwriting guidelines or other laws and regulations. Needless to say, nobody is going to prison.

The evidence makes it plain that UBS’s 'diligence vendors' determined that loans sold by the loan originators to UBS did not conform to underwriting guidelines, yet UBS packaged and sold them anyway. It also limited the scope of the 'diligence' conducted on mortgage loans, and it admits that it securitised various loans for which no 'diligence' was performed to assess whether the loans conformed to underwriting guidelines or had other defects. Its review of securitised mortgage loans, which defaulted shortly after issuance, showed serious problems in the origination of those loans. This did not stop UBS from continuing to purchase and securitise risky loans from the same originators.

The word 'legacy' loomed large in the UBS press release on the matter. It read: “We are pleased to have resolved this legacy RMBS matter from 2006 to 2007, for which UBS is fully provisioned. It was achieved with the best interests of shareholders in mind.”