RBS Set­tles Illi­nois MBS Probe for $20 Mil­lion

National Mortgage News - - Compliance & Regulation - By Bon­nie Sin­nock

The Royal Bank of Scot­land is pay­ing $ 20 mil­lion to set­tle an in­ves­ti­ga­tion by the Illi­nois at­tor­ney gen­eral re­lated to the bank’s mar­ket­ing and sale of res­i­den­tial mort­gage- backed se­cu­ri­ties.

The in­ves­ti­ga­tion had fo­cused on the Royal Bank of Scot­land’s al­leged fail­ure to dis­close the se­cu­ri­ties true risks dur­ing the pe­riod lead­ing up to the 2008 eco­nomic col­lapse.

“With this set­tle­ment, I have re­cov­ered over $ 475 mil­lion for Illi­nois pen­sion sys­tems and res­i­dents as a re­sult of fraud­u­lent con­duct in the mort­gage­backed se­cu­ri­ties market,” Lisa Madigan, the Illi­nois at­tor­ney gen­eral, said in a press re­lease. “Nearly a decade after the eco­nomic cri­sis, I con­tinue to re­cover crit­i­cal funds for the state due to Wall Street’s mis­con­duct.”

RBS re­cently agreed to pay al­most $5 bil­lion to re­solve sim­i­lar fed­eral al­le­ga­tions. In the past year, RBS has agreed to pay more than $ 6 bil­lion to re­solve var­i­ous charges re­lated to the sale and mar­ket­ing of its pre­cri­sis RMBS.

Illi­nois will di­vide the pro­ceeds from its set­tle­ment with RBS be­tween Illi­nois’ Teach­ers Re­tire­ment Sys­tem, the State Uni­ver­si­ties Re­tire­ment Sys­tem, and the Board of In­vest­ment that over­sees the State Em­ploy­ees’ Re­tire­ment Sys­tem.

Other fi­nan­cial ser­vices firms Madigan has set­tled pre­cri­sis RMBS al­le­ga­tions with in­clude Bank of Amer­ica, which agreed to pay $ 300 mil­lion. BofA distributed $ 200 mil­lion of that amount to Illi­nois pen­sion sys­tems and $ 100 mil­lion for con­sumer re­lief. NMN

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