[ by Melanie Gretchen ]

UBS AG will have to face the music.

The Swiss bank earlier this week lost an appeal to suspend a federal regulator's lawsuit accusing it of misleading Fannie Mae and Freddie Mac into buying $6.4 billion of subprime and other residential mortgage-backed securities.  As the U.S. appeals court in Manhattan denied the request by UBS to stay proceedings in federal court in Manhattan, it also ruled that the Federal Housing Finance Agency (FHFA) could continue its case accusing UBS of breaking federal securities laws.

A Busy Year. The FHFA filed 17 cases last year, including this one, against banks over losses suffered by the housing finance giants on approximately $200 billion of mortgage debt.  U.S. District Judge Denise Cote first ruled on this case in May when she rejected UBS's motion to dismiss.  Other defendants that may be affected include Bank of America Corp, Barclays Plc, Citigroup Inc, Goldman Sachs Group Inc, JPMorgan Chase & Co, and Royal Bank of Scotland Group.

The cases: Federal Housing Finance Agency v. UBS Americas Inc et al, U.S. District Court, Southern District of New York, No. 11-05201; and FHFA v UBS in the 2nd U.S. Circuit Court of Appeals, No. 12-3207

For further details, go to [Reuters, 10/1/12].