UBS, the Swiss bank, has been accused in a court in New York of hiding losses and misleading shareholders as the US sub-prime mortgage market collapsed.

According to a lawsuit filed yesterday in the US District Court in Manhattan, the bank and employees including Peter Wuffli, its former chief executive, and Clive Standish, the former finance director, failed to write down the value of their investments quickly enough as the market plunged over the summer.

The lawsuit claims that the delay meant that shares in the group were trading at an inflated price. The lawsuit, which appeals to other shareholders to join a class action, is being handled by the US law firm Coughlin Stoia Geller Rudman Robbins.

UBS said this week that it had written off $10 billion (£4.9 billion), making it the biggest sub-prime casualty of the European banks. In October it wrote off $3.7 billion as the value of bonds it had bought backed by sub-prime mortgages fell. The complaint alleges that legal breaches occurred between March 13 and December 11 this year.

After the writedown announcement, UBS shares fell to 26 per cent lower than the peak reached during the period covered by the lawsuit.

Neither the law firm nor the bank returned calls last night.

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