Royal Park Sues RBS Over $1.6 Billion in RMBS

by Orrick - Structured Finance Group
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On October 11, Royal Park Investments SA/NV sued several Royal Bank of Scotland (RBS) entities in New York state court over its purchase of $1.6 billion worth of residential mortgage-backed securities. At issue in the suit are fifty-three RMBS securitizations that RBS underwrote between 2005 and 2007. Royal Park, which initiated the action as the assignee of Fortis Bank and its subsidiaries, alleges that the offering documents on which the assignors relied contained misrepresentations about the quality of the certificates and underlying mortgage loans. Specifically, Royal Park claims that RBS failed to disclose that due diligence providers had concluded that a significant percentage of the underlying mortgage loans did not comport with underwriting guidelines and made knowing misrepresentations concerning loan-to-value ratios, owner occupancy ratios, certificate credit ratings, and transfer of title to the underlying mortgage loans. Royal Park further alleges that RBS had simultaneously taken short positions through credit default swaps on RMBS similar to those at issue in this case. Royal Park asserts claims for fraud, fraudulent inducement, aiding and abetting fraud, and negligent misrepresentation and seeks both compensatory and punitive damages. Complaint.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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