STAMFORD, Conn. -- The global securities firm RBS Securities, Inc. has entered into an agreement with the U.S. Attorney's Office to pay a penalty of $35 million for a fraudulent trading scheme conducted primarily from its trading floor in Stamford.
In addition, RBS Securities will also pay more than $9 million in restitution to victim customers, which includes firms affiliated with recipients of federal bailout funds through the Troubled Asset Relief Program. The non-prosecution agreement was announced Thursday by Deirdre M. Daly, U.S. Attorney for the District of Connecticut, Christy Goldsmith Romero, Special Inspector General for the Troubled Asset Relief Program, and Patricia M. Ferrick, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation.
According to officials, a government investigation revealed that RBS had perpetrated a scheme from 2008 to 2013 to defraud its customers in trades of residential mortgage-backed securities and collateralized loan obligations. RBS conducted the scheme through its employees, who acted with knowledge encouragement and participation of RBS supervisors and compliance-related personnel, according to Daly.
The scheme included misrepresenting material facts to deceive and cheat its customers in trades, instruction traders to use fraudulent trading practices, lying to victims who detected or suspected they had been victims of fraud, and ignoring or refusing to act on complaints by its own employees who were not part of the scheme, according to Daly.
Under the terms of the non-prosecution agreement, which was entered into on Oct. 25, RBS agreed to pay a penalty of $35 million and make restitution to victims of at least $9,091,317.14. Daly said this resolution takes into account RBS’s voluntary self-reporting, extensive and continuing commitment to cooperate, acceptance of responsibility for its and its employees’ conduct, and remediation efforts.
The agreement addresses only the corporate criminal liability of RBS Securities Inc., not potential criminal charges for any individual. The criminal investigation of individuals associated with RBS’s trading activities remains open, officials said.
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