The Telegraph reports that Northern Rock Asset Management (NRAM), the institution salvaged from the ashes of the bank, and now owned by the UK tax payer, has petitioned a New York court to hear its case against UBS in order to claw back some of the failed lender's losses.
According to court documents seen by The Telegraph, NRAM claims UBS 'knowingly packaged impaired' financial products, including collateralised debt obligations and residential mortgage-backed securities, and sold them to Northern Rock for a high price even though it knew they were shoddy.
UBS has tried to distance itself from the collapse, arguing Northern Rock promised to do its own due diligence on the products, and that it was sophisticated enough to take responsibility for the error. It also pointed out that it made disclaimers warning Northern Rock not to rely on its marketing materials.
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