American victims of bombings and rocket attacks in Israel have sued Swiss bank UBS AG for more than $500 million, accusing the bank of helping fund the militants behind the attacks through dealings with Iran.

The lawsuit seeks damages from Switzerland's largest bank for more than 50 U.S. citizens hurt or relatives of those killed in bombings in Israel between 1997 and 2006 that it said were carried out by militant groups Hezbollah, Hamas and the Palestinian Islamic Jihad.

UBS AG broke several 1996 U.S. laws that prohibit persons and companies from engaging with state sponsors of terrorism and were designed to impede Iran's access to foreign capital, the suit said.

The lawsuit, filed on Friday in federal court in New York, cited U.S. government reports that conclude Iran has been the main sponsor of Hezbollah and Hamas since 1996, including providing tens of millions of cash annually. The U.S. government considers Hamas and Hezbollah terrorist organizations.

"UBS knew full well that the cash dollars it was providing to a state-sponsor of terrorism such as Iran would be used to cause and facilitate terrorist attacks by Iranian-sponsored terrorist organizations such as Hamas, Hezbollah and PIJ," the lawsuit said...