Nomura, RBS liability in US mortgage bond case upped to $839 million

Nomura Holdings Inc and Royal Bank of Scotland Group Plc 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 filed on Friday in Manhattan federal court and covers legal costs the regulator incurred taking the banks to trial earlier this year.
The FHFA had sued the banks in its role as conservator for mortgage giants Fannie Mae and Freddie Mac, which had bought $2 billion in securities from them ahead of the 2008 financial crisis. Following a non-jury trial, US District Judge Denise Cote in Manhattan in May found Nomura, the securities' sponsor, and RBS, an underwriter on some of them, liable.
Cote awarded $806 million to the FHFA and also awarded the regulator its costs and attorneys fees, sums that Friday's agreement covers. Under the agreement, the banks will pay $33 million if after an appeal they pay at least $413 million for state law violations asserted by the FHFA. Should that amount shrink to above $272 million, the parties will let Cote decide how much up to $33 million should be paid. Anything less than $272 million makes the agreement void.
Nomura declined comment. Neither the FHFA nor RBS responded to requests for comment. The case was the first to reach trial of the 18 lawsuits the FHFA had filed in 2011 over some $200 billion in mortgage-backed securities that banks sold to Fannie Mae and Freddie Mac. Before that, the FHFA obtained nearly $17.9 billion in settlements from institutions that include Bank of America Corp , J.P. Morgan Chase & Co and Deutsche Bank AG .
It was unclear how much of the $33 million reflected the FHFA's overall costs in litigating against Nomura. The regulator had hired a private law firm, Quinn Emanuel Urquhart & Sullivan LLP, for the lawsuit. In July, the FHFA disclosed that it had paid nearly $373.5 million to two law firms including Quinn Emanuel from 2010 through February 6 of this year, when Reuters submitted a Freedom of Information Act request. The case is Federal Housing Finance Agency v Nomura Holding America Inc, US District Court, Southern District of New York, No 11-06201.