By Chris Bruce
Oct. 3 — RBS Securities Inc. will pay $120 million to resolve a Connecticut probe on its underwriting of residential mortgage-back securities (RMBS) during the run-up to the financial crisis, Connecticut authorities announced, calling the accord the largest single settlement in the state's history.
According to Connecticut Attorney General George Jepsen and Banking Commissioner Jorge Perez, from January 2005 to December 2008, RBS served as lead underwriter for approximately 250 RMBS deals valued at $250 billion.
They said a four-year probe revealed shortfalls in RBS’s due diligence process, alleging omissions and misstatements in the representations made to the public and investors about the securities.
According to Jepsen, those securities have suffered more than $40 billion in losses. “With today's settlement, we are holding RBS accountable under Connecticut law for its behavior that contributed significantly to the 2008 financial crisis,” he said in a statement Oct. 3.
“We are pleased to have resolved this litigation,” RBS spokeswoman Kat Hanley said in an e-mail Oct. 3 to Bloomberg BNA. “Putting these issues behind us remains a priority; there is more work to be done, but we are making progress.”
As part of the settlement, RBS also signed a consent order with the Department of Banking that resolves claims based on a 2015 agreement between RBS plc and the U.S. Department of Justice.
In that accord, RBS pleaded guilty to violating federal antitrust law by conspiring to manipulate foreign exchange transactions.
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