Nomura To Pay Over $3M to Settle RMBS Fraud Claims brought by NCUA for Credit Unions

 Nomura Home Equity Loan, Inc. and Nomura Asset Acceptance Corporation have agreed to jointly pay over $3M to settle allegations that they engaged in the sale of faulty residential mortgage-backed securities (RMBS) to the Western Corporate Federal Credit Union and the U.S. Central Federal Credit Union. The National Credit Union Administration brought the RMBS fraud case on behalf of the  two corporate credit unions.

 

It was in 2011 that the NCUA Board, while serving as liquidating agent for both financial institutions, brought the claims against the Nomura entities. The RMBS lawsuit was brought in federal district courts in Kansas and California.

The $3M settlement dismisses NCUA’s pending cases against the two firms. By settling, neither firm is denying or admitting to the alleged wrongdoing.

A district court judge had dismissed the claims against the Nomura entities two years ago, noting that the claims were brought in 2011, over three years after WesCorp bought securities from the bank in 2006 and 2007. However, in August, the Ninth Circuit revived the claims, which accuse Nomura of misrepresenting the beleaguered home loans behind the mortgage-backed securities.The three-judge appeals panel pointed to the Financial Institutions Reform Recovery and Enforcement Act of 1989, which gave NCUA the ability to extend deadlines to file any kind of lawsuit as long as it brought the case while serving as trustee for a troubled credit union.

 

NCUA has filed lawsuits against a number of major banks in its effort to recover the billions of dollars lost by now failed credit unions. NCUA has alleged that the credit unions  were misled about the MBSs that they purchased. To date, NCUA has recovered Over 4.5 billion dollars. 

Another bank it has sued is Goldman Sachs (GS), which settled with NCUA for $575M in April, over its alleged sales of faulty MBS to U.S. Central, WesCorp and Southwest.  

 NCUA also settled its mortgage-backed securities case against Royal Bank of Scotland (RBS)  in September for $1.1B on behalf of two credit unions. This was in addition to the $129.6 the bank agreed to pay last year to settle similar claims involving securities that were sold to Members United and Southwest corporate credit unions.

 

In 2012, HSBC (HSBC) agreed to settle NCUA’s RMBS fraud case for $5.25M over securities it sold to five failed wholesale credit unions. The year before, Deutsche Bank Securities (DB) settled NCU’s RMBS case for $145M, while Citigroup (C) agreed to pay $20.5M to settle.   JPMorgan (JPM) settled with NCUA for $1.4B in 2013. 

Earlier this year, Credit Suisse (CS) settled NCUA’s RMBS fraud charges against it for $50.3M. However, the agency still has litigation pending against the Swiss bank in federal court in Kansas. NCUA’s securities lawsuits against UBS Securities (UBS), as well as a number of LIBOR banks and residential mortgage-backed securities trustees, are still pending.

At The SSEK Partners Group, our institutional investor fraud law firm works with investors to recoup their securities losses. We represent high net worth individual investors and institutional clients. Contact our RMBS fraud lawyers to ask for your free case consultation.

Financial Institutions Reform Recovery and Enforcement Act of 1989

Nomura Agrees to More than $3M Settlement for NCUA Securities Claims, NCUA, November 2, 2016