HARTFORD, Conn. (Legal Newsline) — Connecticut Attorney General George Jepsen and state Department of Banking Commissioner Jorge Perez have announced a settlement with RBS Securities Inc. The company will pay $120 million after alleged problems with its underwriting of residential mortgage-backed securities.
"The collapse of financial instruments, especially residential mortgage-backed securities, was directly responsible for the financial crisis that led to the Great Recession that so badly impacted the economies of our state and our nation," Jepsen said.
Jepsen noted RBS allegedly failed to properly determine the quality of the mortgage loans, which compromised many mortgage-backed securities. Jepsen’s office has spent the past four years looking into the matter.
“What we found through this investigation was that RBS, one of the largest RMBS underwriters, failed on multiple fronts to ensure that the information it provided about RMBS deals was accurate,” Jepsen said.
Pérez, for his part, stated the ripple effects of financial institution practices, in conjunction with the devaluation of mortgage-backed securities, led to Connecticut consumers losing their homes and jobs.
"We were pleased to have collaborated with the Attorney General's Office on this investigation,” Pérez said. “Examiners and attorneys from our securities and business investment division used their extensive knowledge of the industry to help identify how the values of these securities were misstated. Together our work helped bring to light where these investors were failed."