Free Consultation | (800) 259-9010 International via WhatsApp: 713-227-2400 (text only) Línea Gratuita México 800-283-3403
RBS Securities Settles MBS Fraud Case With Connecticut for $120M
Royal Bank of Scotland (RBS) subsidiary RBS Securities Inc. will pay the state of Connecticut $120M to settle allegations related to its dealings with mortgage-backed securities leading up to the 2008 financial crisis. According to state officials, RBS played a part in the crisis when it neglected to do the proper due diligence around certain tools for mortgage-backed investments. They accused the subsidiary of unethical and dishonest behavior, as well as of making false statements.They contend that RBS, which was one of the largest underwriters of residential mortgage-backed securities, did not make sure that the information it offered about RMBS deals was accurate. Connecticut Attorney General George Jepsen said that he and the state’s Department of Banking worked together in investigating this matter.
RBS doesn’t securitize newly originated RMBSs anymore. It was, however, the lead underwriter for approximately 250 residential mortgage-backed securities between ’05 and ’08. Part of its job was to perform the due diligence on mortgage loans used for collateral. However, Connecticut claims that RBS’s due diligence was “inadequate,” causing “omissions and misstatements” to be made to the public and investors. They even contend that in certain instance, RBS rated certain loans that had already been lower rated by third-party vendors with higher-grade ratings.
As part of the deal, RBS has to certify with Connecticut’s Department of Banking that it is in compliance with a plan approved by the Financial Industry Regulatory Authority’s National Adjudicatory Council. Of its $120M settlement, $250K will go to the Department of banking for training, financial education, and a program for financial literacy. The remaining balance will go to Connecticut’s General Fund.It was just last month that Royal Bank of Scotland Group consented to settle two civil MBS fraud lawsuits for $1.1B. The settlements are with the National Credit Union Administration Board. Those cases were over the way the bank sold mortgage-backed securities leading up to the 2008 economic crisis. Meantime, the U.S. Justice Department’s MBS fraud probe against RBS remains ongoing.
Our mortgage-backed securities fraud lawyers work with individual investors and institutional investors to recoup their securities losses. Contact The SSEK Partners Group today.
RBS will pay NCUA $1.1B in MBS Probe, Institutional Investor Securities Blog, September 28, 2016