Royal Bank of Scotland has agreed to pay $20 million in a settlement agreement with Illinois, state Attorney General Lisa Madigan has announced.
The deal relates to the bank’s misconduct in its marketing and sale of residential mortgage-backed securities (RMBS) leading up to the 2008 economic collapse. The settlement resolves an investigation by Madigan’s office over the bank’s failure to disclose the true risk of RMBS investments.
Proceeds from the settlement will be distributed among the Teachers Retirement System of the State of Illinois, the State Universities Retirement System of Illinois, and the Illinois State Board of Investment, which oversees the State Employees’ Retirement System.
“With this settlement, I have recovered over $475 million for Illinois pension systems and residents as a result of fraudulent conduct in the mortgage-backed securities market,” Madigan said. “Nearly a decade after the economic crisis, I continue to recover critical funds for the state due to Wall Street’s misconduct.”
According to the attorney general’s office, the RBS settlement is the eighth addressing the sale of mortgage-backed securities during the lead up to the economic collapse. Madigan previously settled with JPMorgan Chase, Citigroup, Bank of America, Morgan Stanley, Goldman Sachs, Standard & Poor’s, and Moody’s.
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