Supreme Court Declines to Hear FHFA Case Against Nomura and RBS

Jun 25, 2018

The U.S. Supreme Court declined to hear an appeal brought by Nomura Holdings Inc. and the Royal Bank of Scotland Group PLC that required the companies pay $839 million to the Federal Housing Finance Agency for misrepresenting the quality of their mortgage-backed securities (MBS) to Fannie Mae and Freddie Mac.

According to a Reuters report, the high court’s decision let stand a New York-based 2nd U.S. Circuit Court of Appeals ruling from last September against the banks. That was preceded by a 2015 by U.S. District Judge Denise Cote against Nomura, which sponsored $2 billion of securities sold to the government-sponsored enterprises, and RBS, which served as underwriter on four of the deals.

With the Supreme Court turning away the case, this brings to the end the last of 18 lawsuits filed by the FHFA in 2011 covering approximately $200 billion in MBS that banks sold Fannie Mae and Freddie Mac and recovered more than $23 billion from the settlements—including $5.5 billion from RBS in a different lawsuit.

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Phil Hall

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Jun 25, 2018

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