The National Credit Union Administration, as liquidating agent (NCUA) and the Royal Bank of Scotland-RBS Securities, Inc. (RBS) have reached a settlement agreement associated with claims arising from the bank’s sale of mortgage-backed securities to two corporate credit unions, the NCUA announced yesterday.
The NCUA brought claims against various banks in 2011, retaining the law firm Korein Tillery and its co-counsel. Lead counsel members at Korein Tillery included Stephen M. Tillery, George A. Zelcs, Michael E. Klenov, Steven M. Berezney, John C. Craig, and Randall P. Ewing, Jr. Korein Tillery served as lead counsel in the litigation against RBS.
NCUA alleged that securities underwriter RBS violated the federal Securities Act of 1933 and various state blue sky laws by misrepresenting the characteristics of loans backing residential mortgage-backed securities sold to member federal credit unions.
NCUA is the first federal institutions regulator to recover losses from investments in these securities on behalf of failed financial institutions. Net proceeds from recoveries are used to pay claims against five failed corporate credit unions, including those of the Temporary Corporate Credit Union Stabilization Fund.
Defendant RBS Securities, Inc. will pay $1.1 billion to settle claims. Once payment is made, NCUA’s recoveries from RBS and various other financial institutions will exceed $4.3 billion.