NEW YORK —(Mealey’s) Royal Bank of Scotland Securities Inc. (RBSSI) on Thursday agreed to pay $99.5 million to settle claims that it violated state and federal securities laws by misrepresenting the investment quality of residential mortgage-backed securities it underwrote that were subsequently sold to Fannie Mae and Freddie Mac (Federal Housing Finance Agency v. Ally Financial Inc., No. 11-7010, S.D. N.Y.; See May 2014, Page 5).
Under the terms of the settlement filed in the U.S. District Court for the Southern District of New York, which is subject to court approval, RBSSI will pay the $99.5 million to settle claims that it issued false and misleading statements in the shelf registration statements for two securitizations of residential mortgage-backed securities that it underwrote in violation of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Sections 13.1-522(A)(ii) and 13.1-522(C) of the Virginia Code.
The Federal Housing Finance Agency (FHFA), on behalf of Freddie Mac and Fannie Mae, originally filed 18 separate but related lawsuits against numerous financial institutions, alleging the same claims. Claims in only three of the actions remain.
Claims against RBSSI in two of the remaining actions were not part of the instant settlement agreement.
The FHFA is represented by Marc E. Kasowitz of Kasowitz, Benson, Torres & Friedman in New York.
RBSSI is represented by Thomas C. Rice, Andrew T. Frankel, Alan C. Turner and David J. Woll of Simpson Thacher & Bartlett in New York.
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