UBS AG and UBS Financial Services cannot be held liable for the damage done to employee retirement plans when its stock price plummeted amid revelations about its massive exposure to subprime mortgage securities and other bad news, a federal judge has ruled.
Southern District Judge Richard Sullivan dismissed a putative class action brought by four employees of the Swiss bank and global financial institution, finding the employees had failed to state a claim that UBS had breached its fiduciary duty and its duty of candor by continuing to include its own stock fund in retirement plans and by concealing material information from employees. The employees had alleged that the defendants knew or should have known that the bank’s exposure to risky mortgage-backed securities, and its role in shielding billions of dollars in assets belonging to wealthy American clients from the Internal Revenue Service, had rendered the UBS stock fund radioactive.
