RBS Securities Inc., which is a Royal Bank of Scotland PLC. Subsidiary (RBS), has agreed to pay $150 million to settle Securities and Exchange Commission allegations that it misled investors in a $2.2 billion subprime residential mortgage-backed security offering in 2007. The money will be used to pay back investors who were harmed.
The SEC claims the RBS said that the loans backing the offering “generally” satisfied underwriting guidelines even though close to 30% of them actually were so far off from meeting them that they should not have been part of the offering. As lead underwriters, RBS (then known as Greenwich Capital Markets,) had only (and briefly) looked at a small percentage of the loans while receiving $4.4 million as the transaction’s lead underwriter.
SEC Division Enforcement co-director George Cannellos said that inadequate due diligence by RBS was involved. The Commissions also says that because RBS was in a hurry to meet a deadline established by the seller, the firm misled investors about not just the quality of the loans but also regarding their chances for repayment.
Of the $150 million that RBS will pay, $80.3 million is disgorgement, $25.2 million is prejudgment interest, and $48.2 million is a civil penalty.
Our RMBS fraud lawyers are here to help investors get back their losses. Unfortunately, many investors lost money in different types of mortgage-backed securities during the economic crisis. Often the investments were recommended by stockbrokers and financial advisers even if they were unsuitable for the client or when not enough proper due diligence was conducted to make sure the investment was a wise one. Contact The SSEK Partners Group today.
SEC Charges Royal Bank of Scotland Subsidiary with Misleading Investors in Subprime RMBS Offering, SEC, November 7, 2013
RBS unit to pay $150 million to settle U.S. SEC charges, Reuters, November 7, 2013
More Blog Posts:
US Supreme Court Hears Oral Argument on the Impact of SLUSA on the Stanford Ponzi Scams, Institutional Investor Securities Blog, October 17, 2013
Securities Whistleblower Roundup: Retaliation Lawsuit Against Thompson Reuters Gets Go Ahead & SEC Issues Its Sixth Bounty Award, Stockbroker Fraud Blog, November 14, 2013
J.P. Morgan’s $13B Residential Mortgage-Backed Securities Deal with the DOJ Stumbles Into Obstacles, Stockbroker Fraud Blog, October 28, 2013