Nomura Holdings and Royal Bank of Scotland have agreed to pay up to $33 million on top of $806 million that a US judge ordered them to pay for making false statements in selling mortgage backed securities. The agreement with the Federal Housing Finance Agency was disclosed in court papers in Manhattan federal court and covers legal costs, the regulator incurred taking the banks to trial earlier this year and is being seen as a huge negative for both the companies involved. It is imperative to state that the FHA had sued the banks in its role as conservator for mortgage giants Fannie Mae and Freedie Mac which had bought $2 billion in securities from them ahead of the 2008 financial crisis.
Following, a non jury trial, the court found Nomura, the securities sponsor and RBS an underwriter on some of them liable. The courts awarded $806 million to the FHFA and also awarded the regulator its costs and attorney fees. Under the agreement, the banks will pay $33 million if after an appeal they at least $413 million for state law violations asserted by the FHFA. All parties to the suit declined to comment on the fresh judgements. It is important to point towards the fact that the case was the first to reach trial of the 18 lawsuits the FHFA had filed 2011 over $200 billion in mortgage backed securities that banks sold to Fannie Mae and Freddie Mac.
Many analysts on the street believe that there could be bigger settlements in the near future as the FHFA brings more banks to book for the financial crisis of 2008. It was in July that the FHFA disclosed that it had paid nearly $373.5 million to law firms including Quinn Emanuel from 2010 through to February earlier this year.