RBS Securities

Majority of Claims Against RBS Dismissed in MBS Suit

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On November 14, 2016, plaintiff Federal Home Loan Bank of Boston (“FHLBB“) and defendants RBS Securities Inc., RBS Acceptance, Inc., RBS Financial Products, Inc., and RBS Holdings, USA (Inc.) (together, “RBS“) filed a joint stipulation seeking the dismissal of certain securities fraud claims alleged by FHLBB in connection with the marketing and sale of 10 RMBS certificates. The stipulation of dismissal does not affect FHLBB’s claims against RBS arising from the sale of two other RMBS certificates, or FHLBB’s claims against any other defendant. FHLBB brought this litigation against RBS and dozens of other defendants in 2011, alleging violations of Massachusetts securities laws and claiming the defendants made untrue statements and omitted material facts about the quality of the loan pools underlying the securities. Further details of the dismissal are not publicly available. Stipulation.

FDIC Settles RMBS Litigation for $190 Million with U.S. Financial Institutions

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On May 26, 2016, the FDIC reached a $190 million settlement of RMBS claims against eight financial institutions, including Barclays Capital Inc.; Deutsche Bank Securities Inc.; Goldman, Sachs & Co; RBS Securities Inc.; and UBS Securities LLC. The settlement resolves six separate suits brought in 2011 and 2012 in California and Alabama alleging misrepresentations within the defendant underwriters’ RMBS offering documents.  The FDIC, as a receiver, will distribute the settlement funds among five failed bank receiverships.  FDIC Settlement Agreement.

District Court Allows NCUA’s RMBS Suit to Proceed Against RBS

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Nat’l Credit Union Admin. Bd. v. RBS Sec. Inc. et al., No. 2:11-cv-05887 (C.D. Cal. July 18, 2011)

On March 16, 2015, Judge George Wu of the United States District Court for the Central District of California denied RBS Securities Inc.’s motion to dismiss the National Credit Union Administration’s second amended complaint.  In July 2011, NCUA sued RBS on behalf of WesCorp, a federal credit union, in order to recover billions of dollars for failed wholesale credit unions claiming investment banks misled them about the nature and quality of offered RMBS.  NCUA alleges that RBS’ underwriters downplayed investment risks and made misrepresentations in offering documents by underestimating the likelihood that borrowers would default on their mortgages.  Judge Wu said that the court would not consider a motion to dismiss parts of claims under F.R.C.P. 12(b)(6).  He noted that his approach differed from that of Judge John W. Lungstrum of the District of Kansas, who agreed to hear motions to dismiss portions of a claim in NCUA v. RBS Secs., Inc., No. 11-2340-JWL (D. Kan. June 20, 2011), denying and granting those motions in part.  Order.

 

Monoline Insurer Assured Sues RBS in Connection with $1.15 Billion RMBS Securitization

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On March 26, Assured Guaranty Municipal Corp. sued RBS Securities in the United States District Court for the Southern District of New York for fraud in connection with a financial guaranty insurance policy that Assured provided to RBS as part of a $1.15 billion RMBS securitization.  Assured alleges that it was induced to insure the certificates by RBS’s alleged material misrepresentations and omissions, including the loan-to-value and borrower-to-income ratios of underlying mortgages, owner occupancy status and adherence to originator underwriting standards.  Assured alleges that it expects to pay $100 million in claims by investors in the securitization.  Assured brings claims for common law fraud, aiding and abetting common law fraud and civil conspiracy to defraud, all under New York law.  Complaint.

RBS Wins Dismissal of South Korean Bank Case

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On December 27, 2012, Judge Harold Baer, Jr. of the United States District Court for the Southern District of New York dismissed an action brought by Woori Bank against RBS Securities and related entities claiming fraud, negligent misrepresentation, and unjust enrichment.  Woori alleged that defendants knowingly marketed CDOs based on RMBS that had a greater risk than their ratings suggested, and that RBS fraudulently and negligently induced Woori to buy those CDOs.  Further, Woori alleged that RBS concealed or failed to properly disclose their efforts to manipulate LIBOR rates.  The court dismissed the fraud claim because Woori’s allegations did not specifically connect RBS’s alleged knowledge of problems or suspect behavior to the transactions at issue.  Further, the court found that Woori was unable to show with sufficient specificity any facts that demonstrated RBS had created an inherently unfair transaction by failing to disclose information and accordingly dismissed the negligent misrepresentation claim.  Decision.