SACRAMENTO, Calif. (Legal Newsline) — California Attorney General Xavier Becerra announced Dec. 22 the Royal Bank of Scotland (RBS), a financial conglomerate with holdings throughout the world, will pay $125 million after allegations of misrepresentations about residential mortgage-backed securities sold to CalPERS and CalSTRS, the state’s public employee and teacher pension funds.
Mortgage-backed securities are collections of thousands of mortgage loans made to consumers. The securities are sold to investors with the understanding that all loans in the collections have been screened and are not overly risky.
According to Becerra’s office, RBS failed to properly screen the mortgage-backed securities it sold. Investors were allegedly left unaware of the poor quality loans that had been mixed into the collections. Becerra alleges that RBS knew of the faulty quality of its mortgage-backed securities but sold them anyway.
“RBS decided to mislead California’s pension funds in order to line its own pockets – plain and simple,” Becerra said. “Today’s settlement returns to our pension funds, which hardworking Californians rely on upon retirement, money that RBS wrongfully took from them.”
The settlement with RBS is a continuation of Becerra's and his predecessors’ efforts to recover losses from the financial crisis.
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Organizations in this Story
California Office of the Attorney General
Royal Bank of Scotland