Royal Bank of Scotland to pay SEC USD153.7 M
The Royal Bank of Scotland (RBS) agreed on Thursday to pay the Securities and Exchange Commission (SEC) a fine totaling USD153.7million. The settlement was made to resolve a civil case alleging it misled investors into buying a risky subprime mortgage product.
The RBS was indicted for a USD2.2 billion mortgage-backed security offering made in 2007.
The SEC accused the British bank of issuing misleading statements and concealing risks associated with these mortgage securities.
The RBS allegedly told investors that the loans underlying the security met the original lender's guidelines, but in fact at least 30% fell short of the requirements. Said misrepresentations resulted to investors incurring losses.
The SEC said that the money it will collect from RBS would go toward compensating harmed investors, according to a report by Reuters.
Other baking majors including JPMorgan Chase & Co., Citigroup Inc. and The Goldman Sachs Group Inc. have faced similar charges from the SEC. The move against RBS was the latest among SEC's crackdown on mortgage practices that fueled the financial crisis, the New York Times said.