RBS unit fined $150 mn over mortgage securities
US securities regulators said Thursday they were fining a subsidiary of the Royal Bank of Scotland $150 million for overstating the quality of underlying assets in a 2007 mortgage-backed security offering.
RBS Securities agreed to settle the Securities and Exchange Commission's civil suit, which charged that it "misled investors about the quality and safety of their investments" in the $2.2 billion offering, causing investors to lose at least $80 million.
The SEC said that RBS Securities -- at the time named Greenwich Capital Markets -- "knew or should have known" that almost 30 percent of the underlying home mortgages acquired for the security were so far below the company's own standards "that they should have been kicked out of the offering entirely."
"In its rush to meet a deadline set by the seller of these loans, RBS cut corners and failed to complete adequate due diligence, with predictable results," said George Canellos, co-director of the SEC's Division of Enforcement.
RBS neither admitted nor denied the allegations as it agreed to settle the case.
US regulators, the government and injured investors have sued banks for billions of dollars over losses incurred on subprime mortgage-backed securities that collapsed in value in the economic crisis.