By Sarah N. Lynch
WASHINGTON Nov 7 A unit of the Royal Bank of
Scotland agreed to pay more than $150 million to settle
civil charges alleging it misled investors in a financial
crisis-era subprime mortgage product, U.S. regulators said on
The Securities and Exchange Commission said the money it
will collect from RBS Securities Inc would go toward
compensating harmed investors.
The bank agreed to settle with the SEC without admitting or
denying the charges, which allege that it misled investors about
the quality of the underlying loans and the likelihood they
would be repaid.
In a statement, the company said it "cooperated fully" with
the SEC and expects to make a total payment to the SEC of $153.7
RBS is 81-percent owned by the British government. The bank
said that its payments to the SEC are "covered by provisions
already made by RBS."
The $2.2 billion offering at the center of the SEC's case
was made in 2007.
The SEC said that RBS told investors that the loans
underlying the security "generally" met the lender's
underwriting guidelines, but in fact 30 percent of it fell short
and should have been excluded from the loan pool.
A unit of the bank was paid $4.4 million as lead underwriter
for the deal, but only hastily reviewed a small portion of the
loans, the SEC added.
"In its rush to meet a deadline set by the seller of these
loans, RBS cut corners and failed to complete adequate due
diligence, with predictable results," said George Canellos, a
co-director of the SEC's enforcement division.