UBS enjoyed some respite in its legal battles in the

US after a lawsuit against the Zurich-listed bank alleging that it engaged in fraud related to holdings of a fund in loss-making company Endwave was dismissed by a New York Supreme Court judge, say media reports.

The complaint claimed UBS was aware that Wood River Partners, a now-defunct hedge fund in which the plaintiffs invested and UBS was prime broker and custodian, owned a large amount of Endwave stock, which triggered US Securities and Exchange Commission reporting requirements.

The fund had not made the required reports, the complaint said, citing the plaintiffs.

It alleged UBS did not make disclosures or withdraw as prime broker, but manipulated the Endwave market "to suit its own needs," and "artificially created a short market for Endwave stock, secretly borrowed from the fund's account, and caused the value of the fund's portfolio to decrease."

Plaintiffs said the fund lost $20 million in face value due to Endwave, according to the document.

However, UBS said it was not directly accountable to the plaintiffs and moved to dismiss the complaint, which was filed in May 2007.

Meanwhile, UBS will pay the state of

Massachusetts another $1 million to end a probe by Attorney General Martha Coakley into the Swiss bank’s sales of auction-rate securities to certain communities, reports said.

Most of the $1 million proposed settlement, which still needs court approval, goes to the state to cover fees and the costs of the five-month investigation. But $250,000 will be used to educate local treasurers and other financial officials about investments.

The bank had previously agreed in May to return $35 million to 17 cities and towns as well as the Massachusetts Turnpike Authority, which had invested in the long-term bonds with rates that reset every week or month.

Ms Coakley said that UBS agreed to reimburse the remaining communities who invested in auction-rate securities - including repayments totalling $3.4 million to
Fall River,
Norwood, Southboro and

Woburn.

“We are pleased with the results in this case,” Ms Coakley said in a statement today. “Our primary interest was to promptly return to these towns and cities the investment monies they placed with UBS.”

Investors’ assets got tied up when the $330 billion auction-rate securities market collapsed in February on concerns about the creditworthiness and stability of firms that insure the debt.