Statement of Financial Condition
UBS Securities LLC
Notes to the Statement of Financial Condition (continued)
(In Thousands)
14. Commitments and Contingencies (continued)
Legal Proceedings (continued)
If any of those conditions is not met, such matters result in contingent liabilities. If the amount of
an obligation cannot be reliably estimated, a liability exists that is not recognized even if an outflow
of resources is probable. Accordingly, no provision is established even if the potential outflow of
resources with respect to such matters could be significant.
Specific litigation, regulatory and other matters are described below, including all such matters
that management considers to be material and others that management believes to be of
significance due to potential financial, reputational and other effects. The amount of damages
claimed, the size of a transaction or other information is provided where available and appropriate
in order to assist users in considering the magnitude of potential exposures.
It is not practicable to provide an aggregate estimate of liability for our litigation, regulatory and
similar matters as a class of contingent liabilities.
Doing so would require us to provide speculative legal assessments as to claims and proceedings
that involve unique fact patterns or novel legal theories, which have not yet been initiated or are at
early stages of adjudication, or as to which alleged damages have not been quantified by the
claimants. Although we therefore cannot provide a numerical estimate of the future losses that
could arise from the class of litigation, regulatory and similar matters, we believe that the aggregate
amount of possible future losses from this class that are more than remote substantially exceeds
the level of current provisions. Litigation, regulatory and similar matters may also result in non-
monetary penalties and consequences. For example, the non-prosecution agreement which the
Parent entered into with the U.S. Department of Justice ("DOJ"), Criminal Division, Fraud Section
in connection with its submissions of benchmark interest rates, including among others the British
Bankers' Association London Interbank Offered Rate ("LIBOR"), was terminated by the DOJ
based on its determination that the Parent had committed a "US" crime in relation to foreign
exchange matters. As a consequence, UBS AG pleaded guilty to one count of wire fraud for
conduct in the LIBOR matter, paid a fine and was subject to probation, which ended in January
2020. A guilty plea to, or conviction of, a crime could have material consequences for the Parent
or the Company.
Resolution of regulatory proceedings may require the Parent or the Company to obtain waivers of
regulatory disqualifications to maintain certain operations, may entitle regulatory authorities to
limit, suspend or terminate licenses and regulatory authorizations and may permit financial market
utilities to limit, suspend or terminate participation in such utilities. Failure to obtain such waivers,
or any limitation, suspension or termination of licenses, authorizations or participations could have
material consequences for the Parent or the Company.
Residential Mortgage-backed Securities and Mortgages. From 2002 through 2007, prior to the
crisis in the U.S. residential loan market, the Company was a substantial underwriter of U.S.
RMBS.
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