Royal Bank of Scotland Group pays $125 million to resolve claims that it made misrepresentations whereas promoting mortgage-backed securities to 2 massive California pension funds, the state’s lawyer basic has introduced.
The settlement introduced on Friday by California Legal professional Normal Xavier Becerra was the most recent by RBS aimed toward resolving claims stemming from its sale of mortgage-backed securities, which had been on the coronary heart of the 2008 monetary disaster.
Becerra’s workplace mentioned these securities had been sometimes backed by 1000’s of mortgage loans of various high quality during which the customer relied on the reassurance that these mortgages had been rigorously screened and weren’t overly dangerous.
Becerra’s workplace additionally mentioned its investigations discovered that RBS didn’t precisely speak in confidence to traders the true traits of lots of the 1000’s of mortgages underlying the securities.
The probe additionally discovered that these misrepresentations led to tens of millions of in losses to the California Public Workers’ Retirement System and the California State Academics’ Retirement System, Becerra’s workplace mentioned.
“RBS determined to mislead California’s pension funds to be able to line its personal pockets – plain and easy,” Becerra mentioned in a press release.
RBS Chief Govt Officer Ross McEwan in a press release on Saturday mentioned the financial institution was happy to have reached the settlement, which associated to points with mortgage-backed securities in 2004 to 2008.
“Now we have been very clear that placing our remaining legacy points behind us is a key a part of our technique,” he mentioned.
The settlement comes as RBS continues to hunt to resolve a U.S. Justice Division investigation into its gross sales of mortgage-backed securities earlier than the monetary disaster.
In July, RBS agreed to pay $5.5 billion to resolve a lawsuit by the Federal Housing Finance Company, the conservator for Fannie Mae and Freddie Mac, claiming that it misled the U.S. mortgage giants into shopping for mortgage-backed securities.
In September 2016, the U.S. Nationwide Credit score Union Administration introduced that RBS had agreed to pay $1.1 billion to resolve claims over mortgage-backed securities it offered to credit score unions that later failed.
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