Appeals Court Upholds $839M MBS Fraud Judgment Against Royal Bank of Scotland Group & Nomura

In a unanimous ruling, a U.S. Court of Appeals for the 2nd Circuit panel has turned down an appeal by Royal Bank of Scotland Group Plc (RBS) and Nomura Holdings Inc. (NMR) to overturn an order mandating that they pay $839M for the false statements, including misrepresentations, that they are accused of making while selling mortgage-backed securities to Freddie Mac (FMCC) and Fannie Mae (FNMA). The MBS fraud award was issued against the two banks in the Federal Housing Finance Agency’s securities lawsuit. FHFA has been the conservator for Fannie and Freddie ever since the US government took them over after the housing market failed in 2008.

Nomura sponsored $2B of securities that were sold to the mortgage companies. RBS was the underwriter on four of the deals. In a filing submitted to US securities regulators last month, RBS said it is looking to be indemnified by Nomura for the losses.

In a 2015 ruling, U.S. District Judge Denise Cote said that offering documents failed to correctly describe the mortgages backing the securities. She said that the degree of “falsity” was “enormous.”

Judge Cote ordered both banks to pay $806M. They later consented to pay another $33M for legal fees and costs.

Appeals Court Agrees with Judge Cote
This week, the three-judge appeals panel agreed with Cote’s reasoning and pointed to The Securities Act, which established fair dealing and honesty standards, as well as authorized federal courts to impose civil remedies for the failure to uphold those standards.

FHFA Sued Big Banks for Mortgage-Backed Securities Fraud
FHFA has brought at least 18 lawsuits against the banks that sold mortgage-backed securities to Freddie Mac and Fannie Mae. Those other cases have already been resolved, resulting in over $23B in financial recovery, including $5.83B from Bank of America (BAC), $4B from JPMorgan Chase & Co. (JPM), and $5.5B from RBS in a different mbs fraud case.

If you are an investor that has sustained losses because of MBS fraud, please contact The SSEK Partners Group today. We represent high net worth individual investors and institutional investors who suffered losses from backing certain securities when the housing market failed in 2008. Contact us today to speak with an experienced securities fraud lawyer. Your first session with us is a free, no obligation session to help you determine whether you have grounds for a case.

Nomura, RBS lose bid to overturn $839 million mortgage bond award, Reuters, September 28, 2017

More Blog Posts:
Royal Bank of Scotland Settles FHFA’s MBS Securities Probe For $5.5B, Institutional Investor Securities Blog, July 12, 2017
UBS and Credit Suisse Settle Mortgage-Backed Securities Cases With for $445M and $400M, Respectively, Institutional Investor Securities Blog, May 4, 2017

Ex-F-Squared CEO on Trial Against SEC in Exchange-Traded Fund Fraud Case, Stockbroker Fraud Blog, September 11, 2017