RBS Securities Inc. has reached a settlement with the government over allegations it deceived customers on mortgage-related securities transactions.
The Royal Bank of Scotland Group plc subsidiary has entered a
non-prosecution agreement with the Department of Justice, a statement Thursday said.
At issue is alleged fraudulent trading through its now-defunct U.S. asset-backed securities, mortgage-backed securities and commercial mortgage-backed securities trading group.
According to the government, RBS defrauded customers
from 2008 through 2013 on trades of residential MBS and collateralized-debt obligations.
RBS allegedly
misrepresented material facts to deceive and cheat its customers in trades — including lying about the seller’s asking price or the buyer’s bid. It is also accused of creating fictitious third parties that it portrayed as sellers.
“For years, RBS fostered a culture of securities fraud,” U.S. Attorney for the District of Connecticut Deirdre M. Daly said in the statement. “Those in a position of authority taught and encouraged fraudulent trading practices. Worse, those supervisors and compliance personnel then took steps to prevent victims and honest RBS employees from discovering and exposing the scheme.”
The
non-prosecution agreement, which was executed on Wednesday, requires the payment of a $35 million penalty and $9 million in restitution.
In 2015, two former RBS executives, Matthew Katke and Adam Siegel, pled guilty in connection with the scheme.
In July, the
Royal Bank of Scotland reached a $5.5 billion settlement that resolved allegations it misled Fannie Mae and Freddie Mac in the sale of private-label RMBS.
