RBS to pay US$44 million to settle US claims it defrauded customers
FILE PHOTO - A logo at a branch of the Royal Bank of Scotland is seen reflected in a window in the City of London December 16, 2014. REUTERS/Toby Melville/File Photo
REUTERS: A unit of Royal Bank of Scotland Group Plc has agreed to pay more than US$44 million and enter a non-prosecution agreement to settle a U.S. criminal probe into traders accused of defrauding customers on bond prices.The settlement, with RBS Securities Inc, was announced on Thursday by U.S. Attorney Deirdre Daly in Connecticut.RBS will pay a US$35 million fine, plus at least US$9.09 million of restitution to more than 30 customers including Pacific Investment Management Co, Soros Fund Management, and affiliates of Barclays, Citigroup, Goldman Sachs and Morgan Stanley.The bank cooperated with the probe, and the criminal probe into individuals associated with its trading will continue."RBS has zero tolerance for market misconduct," the bank said in a statement. "We are pleased to be able to resolve this issue as we continue to build a simpler, stronger bank that is fully focused on serving our customers well."The settlement arose from a now five-year federal crackdown into deceptive bond trading in which eight traders, including two from RBS, have been criminally charged.
Daly said RBS schemed from 2008 to 2013 to defraud customers in trades of residential mortgage-backed securities and collateralized bond obligations, hoping to boost its profit at customers' expense.The trading was done through the bank's U.S. asset-backed securities, mortgage-backed securities and commercial mortgage-backed securities trading group, which was shut down in 2015, settlement papers show.Some of the victims were recipients of federal bailout money through the Troubled Relief Asset Program, Daly said.(Reporting by Jonathan Stempel in New York; Editing by Chizu Nomiyama and Steve Orlofsky)
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