NCUA alleged that the Swiss bank misled two credit unions, including US Central and WesCorp and price paid by them surpassed $1.1bn, which later failed.
NCUA board chairman Debbie Matz said the strength of the entire financial system relies on trust and accountability.
"As our complaint makes clear, UBS Securities violated this trust, which contributed to the collapse of two corporate credit unions and the resulting crisis in the credit union industry," Matz added.
"NCUA has worked to restore stability to the credit union system. Now we intend to hold UBS Securities, as well as other responsible parties, accountable."
NCUA accused the lender for falsifying and misrepresentation and omissions of material facts in the offering documents of the securities sold to the failed corporate credit unions.
The false and disguise information as well as faulty underwriting guidelines prompted US Central and WesCorp to believe the risk of loss was minimal, when in fact the risk was substantial, claims the federal regulator agency.
Previously, NCUA has filed similar cases against JP Morgan Securities, RBS Securities, Goldman Sachs, and Wachovia.
It has settled claims valued at over $170m with Citigroup, Deutsche Bank Securities, and HSBC, making it the first federal regulatory agency for depository institutions to recover losses on behalf of failed financial institutions that resulted from investments in faulty securities.
