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UBS AG (UBS - Analyst Report) can now breathe a sigh of relief as it has won a discharge of a lawsuit brought forward by shareholders who accused the company of issuing deceptive statements regarding the company’s mortgage-backed securities exposure as well as its compliance with the tax laws in the U.S., according to a Reuters report.

This case against UBS AG, where the lead plaintiff was the City of Pontiac Policemen's and Firemen's Reitrement System, was dismissed with “prejudice” implying that the case cannot be appealed once again by the plaintiff at the district court level.

According to the U.S. District Judge, despite a string of bad debts on the part of UBS and its adverse impact on the company and its shareholders, it is not sufficient enough to institute and back any allegations of securities fraud.

The lawsuit, which was filed in 2007, had charged UBS of misrepresentation of its exposures to mortgage-related and auction rate securities portfolios. Moreover, the plaintiff has alleged the company of misleading investors through its involvement in a scheme by which it helped its clients in the U.S. to dodge taxes. Notably, the company opted for a settlement with the U.S. government in 2009 for resolving the criminal matter.

Post the financial crisis, Wall Street big shots such as Citigroup Inc. (C - Analyst Report) and JPMorgan Chase & Co. (JPM - Analyst Report), have been facing several lawsuits involving misrepresentation of exposure to mortgage backed securities. UBS too has not been spared. But this dismissal is a relief in the sense that it would not further heighten the litigation overhangs of the company. Hence, neither any penalty nor settlement amount is required for resolving the issue.

However, UBS AG currently retains its Zacks #4 Rank, which translates into a short-term Sell rating.

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