UBS Group AG UBS has urged a U.S. judge to dismiss claims that the bank should be held liable for losses of $2 billion incurred by investors on mortgage-backed securities (MBS) that were issued before the housing market meltdown. The lawsuit was brought by U.S. Bancorp on behalf of three trusts established for MBS.The news reported by Reuters stated that, on Friday, lawyers representing UBS made their closing arguments in the non-jury trial in Manhattan federal court. Sean P. Baldwin, the trusts' lawyer stated that UBS agreed that the mortgages underlying those securities would conform to certain standards. However, when deficiencies continued to appear, the bank refused to repurchase them.He mentioned, “UBS knew of the defects and decided to ignore them or – in some cases – turn a blind eye to them.” Baldwin said that the Swiss banking giant should be held accountable for its business decision.In defense, UBS’ lawyer, Robert Fumerton stated that the though the trusts claimed that thousands of loans were defective under the governing contracts, they had failed to establish that those defects were material. He noted, "Not all breaches of the guidelines and not all breaches of the representations and warranties are material.”Notably, in 2013, UBS shelled out $358 million to Assured Guaranty Ltd. in a case involving the same three trusts. The lawsuit had accused the bank of misrepresenting the quality of the loans underlying $1.49 billion of MBS insured by UBS.While the outcome of the case is uncertain as of now, any unfavorable ruling is likely to further add to the legal woes of UBS Group. Also, the company is exposed to huge potential expenses from the case that may affect its financials.Currently, UBS carries a Zack Rank #5 (Strong Sell). Some favorably ranked stocks in the foreign banks space include Australia & New Zealand Banking Group Limited ANZBY, Grupo Financiero Galicia S.A. GGAL and Shinhan Financial Group Company Limited SHG, each sporting a Zacks Rank #1 (Strong Buy).Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report UBS GROUP AG (UBS): Free Stock Analysis Report AUST&NZ BKG-ADR (ANZBY): Free Stock Analysis Report SHINHAN FIN-ADR (SHG): Free Stock Analysis Report GRUPO GALIC ADR (GGAL): Free Stock Analysis Report To read this article on Zacks.com click here.