Tuesday, July 19, 2011 11:06:00 AM
ALEXANDRIA, Va. - NCUA is seeking $629 million in damages from RBS Securities, again alleging that that firm violated federal and state securities laws when it sold securities to Western Corporate FCU.
The agency filed the suit on Monday, its third stemming from the collapse of five corporate credit unions and the second against RBS. The agency said Monday it plans to file between five and 10 lawsuits.
The NCUA in its suit has claimed that RBS' sellers and underwriters "made numerous material misrepresentations in the offering documents.
"These misrepresentations caused WesCorp to believe the risk of loss associated with the investment was minimal, when in fact the risk was substantial. The mortgage-backed securities experienced dramatic, unprecedented declines in value, effectively rendering WesCorp insolvent," the agency added.
The NCUA said the suits are intended to "recover losses from the purchase of securities that caused the failures" of five large wholesale credit unions. Those institutions are U.S. Central, WesCorp, Southwest Corporate, Members United Corporate, and Constitution Corporate.
The agency is currently requesting $1.5 billion in combined damages.