The bank settled with a group of plaintiffs including pension and health funds, according to a Bloomberg report. The agreement is the third-largest class-action settlement over mortgage-backed securities.
The lawsuit, filed in 2008, alleged that RBS offering documents for Harborview mortgage-backed securities didn’t disclose that the loans backing the bonds weren’t originated in accordance with the applicable underwriting guidelines, Bloomberg reported. By the end of 2008, nearly all the securities had been downgrqaded to junk bond status.
“This settlement will give closure and monetary relief to investors who suffered losses in connection with these Harborview mortgage-backed securities,” Steven Toll, managing partner for plaintiffs’ law firm Cohen Milstein, said in a statement.
Both RBS and the plaintiffs say they intend to submit a motion for approval of the settlement, Bloomberg reported. The settlement must then be approved by U.S. District Judge Harold Bauer Jr. before going into effect.
Royal Bank of Scotland is ponying up $275 million to settle with investors who sued over shoddy mortgage-backed securities.