Eight banks are settling with the Federal Deposit Insurance Corporation (FDIC) as receiver for five failed banks for federal and state securities law claims based on misrepresentations in offering documents for 21 Countrywide residential mortgage-backed securities (RMBS) purchases by those banks.
The banks (Barclays Capital Inc.; BNP Paribas Securities Corporation; Credit Suisse Securities (USA) LLC; Deutsche Bank Securities Inc.; Edward D. Jones & Co., L.P.; Goldman, Sachs & Co; RBS Securities Inc.; and UBS Securities LLC.) settled with the FDIC for $190 million.
As the receiver, the FDIC has the authority to sue professionals and entities whose conduct resulted in losses to those institutions in order to maximize recoveries. The FDIC filed six lawsuits between November 2011 and August 2012 for violations of federal and state securities laws in connection with the sale of the 21 RMBS to the failed banks. Total, the FDIC has filed 19 RMBS lawsuits on behalf of eight failed institutions seeking damages for violations of federal and state securities laws.
The settlement funds will be distributed among five failed bank receiverships: Colonial Bank of Montgomery, Ala., which failed Aug. 14, 2009; Franklin Bank, S.S.B. of Houston, which failed Nov. 7, 2008; Guaranty Bank of Austin, Texas, which failed Aug. 21, 2009; Security Savings Bank of Henderson, Nev., which failed Feb. 27, 2009; and Strategic Capital Bank of Champaign, Ill., which failed May 22, 2009.
Cover Story: