LOS ANGELES (12/20/11)--A U.S. District judge in Los Angeles has ordered the National Credit Union Administration (NCUA) and RBS Securities Inc. to start negotiating a settlement of NCUA's lawsuit against the firm over the losses incurred when Western Corporate FCU collapsed.
NCUA and the Royal Bank of Scotland "shall appear before a retired judicial officer or other private or non-profit dispute resolution body for mediation-type settlement proceedings," said the order, which was signed by U.S. District Judge George Wu on Dec. 7 in the U.S. District Court for the Central District of California.
NCUA is seeking $629 million in damages from RBS, alleging that the firm violated federal and state securities laws when it sold securities to WesCorp. The agency claimed that RBS sellers and underwriters made numerous material misrepresentations in the offerings documents that caused WesCorp to believe the risk of loss associated with the investment was minimal (News Now July 19).
The suit is one of several in which NCUA is seeking about $2 billion total for losses to the corporate system. NCUA also sued RBS and J.P. Morgan Securities LLC in a U.S. District Court in Kansas related to securities purchased by the now defunct Lenexa, Kan.-based U.S. Central FCU.
NCUA has also filed suits against JP Morgan Chase in the U.S. District Court for the Central District of California, as well as separate suits against Goldman Sachs and Wells Fargo, which succeeded Wachovia Bank, for investments that led to losses for corporate credit unions.
In November it was announced that NCUA had reached settlements in its suits with Citigroup and Deutsche Bank Securities over their underwriting of residential mortgage backed securities to five failed corporates. Neither Citigroup nor Deutsche Bank admitted any fault in the settlements. Deutsche Bank has agreed to pay the agency $145 million, and Citigroup agreed it will pay $20.5 million (News Now Nov. 15).