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RBS in Record-Setting $4.9B RMBS Settlement

Phil Hall
Aug 14, 2018
Moody’s Investors Service Inc. has agreed to a $16.25 million settlement with the Securities & Exchange Commission (SEC)

The Royal Bank of Scotland Group (RBS) has agreed to a $4.9 billion settlement that will resolve federal civil claims that the company intentionally misled investors in the underwriting and issuing of residential mortgage-backed securities (RMBS) between 2005 and 2008. The settlement is the largest imposed by the Department of Justice for actions that occurred in the period prior to the 2008 economic meltdown.
According to the federal charges, RBS failed to disclose the systemic problems with originators’ loan underwriting, changed its due diligence findings on the RMBS issuances without justification, offered investors incorrect loan data and failed to disclose due diligence and kick-out caps connected to the securities. In accepting the settlement, RBS disputed the allegations made against it and does not admit wrongdoing.
“Many Americans suffered lasting economic harm as a result of the 2008 financial crisis,” said Acting Associate Attorney General Jesse Panuccio. “This settlement holds RBS accountable for serious misconduct that contributed to that financial crisis, and it sends an important message that the Department of Justice will pursue financial institutions that illicitly harm the American economy and our consumers.”
In July, RBS agreed to a $20 million settlement with the State of Illinois in connection to the bank’s marketing and sale of risky RMBS in the years before the 2008 recession.

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