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
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."