Merrill Lynch and UBS sold billions of dollars in CDOs to investors around the world. Some of the CDOs which sustained heavy losses include Norma CDO I, Centre Square CDO, South Coast Funding V CDO, Mezzanine ABS CDO, the Tabs CDO and North Street 2002-4.
Norma CDO I Ltd., brought into existence by Merrill Lynch bet heavily on the success of the sub-prime market. Just nine months after it sold about $1.5 billion in securities to its investors, the value of Norma has been decimated in the collapse of the housing market and is reported to be worth only a fraction of its original value. The federal prosecutors and the SEC stated that they were looking into whether Wall Street brokerage firms, like Merrill Lynch and UBS, “deliberately misvalued, or ‘mismarked,’ massive holdings of mortgage securities.” Further, the U.S. Justice Department is looking into whether brokerage firms committed fraud in their “originating, packaging and selling mortgage-related products.”
North Street 2002-4, was brought into existence by UBS and sold to institutional investors. The investigation involves the portfolio of CDOs tied to the U.S. Mortgage Market, which UBS sold to its customers. HSH Nordbank (HSH) filed a lawsuit against UBS for breach of “contractual and fiduciary duties” in connection with the management of North Street. In the Complaint filed against UBS in New York State Court, HSH said that “UBS exploited the structure [of North Street] for its own ends, at HSH’s expense, in violation of its contractual and fiduciary duties.” HSH also said in the Complaint that “UBS knowingly and deliberately created a compromised structure.”
KlaymanToskes is investigating how Merrill Lynch and UBS marketed their CDO products, and whether the brokerage firms properly disclosed the risks of the products to its investors. The issue of whether Merrill Lynch and UBS over-stated and inflated the value of their CDO products is rapidly becoming a common theme in the investigation. Further, KlaymanToskes is looking into whether the CDOs were suitable for the institutions, municipalities, fund of funds, and pension funds that invested in the products through Merrill Lynch and UBS.
KlaymanToskes has already filed numerous arbitration claims on behalf of investors who lost millions in the CDO market. If you are an investor in CDOs that were packaged and/or underwritten by Merrill Lynch and UBS, or if you have information relevant to our investigation, please contact our firm.