Fines & Penalties Monitor: December 2017

Total fines, penalties and settlements (f/p/s) paid out by the 18 largest financial institutions headquartered in the U.S. and Europe in 2017 was $10.9B, approximately one third the amount paid out in 2016 ($30.7B).

The month of December saw one settlement paid out to the amount of $125.0MM.  This was the settlement that Royal Bank of Scotland (RBS) reached with the California Attorney General over residential mortgage-backed securities (RMBS) missold to California’s public employee and teacher pension funds from 2004 to 2008.  Those securities were backed by thousands of mortgage loans of varying quality in which the buyer relied on the assurance that those mortgages were not overly risky.  The lender failed to disclose the exact quality of underlying mortgages in these portfolios, the attorney general’s office said.  The probe found that those misrepresentations led to millions of dollars in losses to the California Public Employees’ Retirement System and the California State Teachers’ Retirement System.

Based on CPG’s analysis, the categories with the highest dollar total of f/p/s were RMBS settlements, LIBOR and EURIBOR manipulation, and forex rigging.  The largest single dollar amount paid of the f/p/s belonged to RBS, which was ordered to pay $5.5B in July to settle with Federal Housing Finance Agency (FHFA) for miss-selling mortgage backed securities in the run-up to the financial crisis.

Read our Risk Monitor for December 2017’s Fines and Penalties.



Leave a Reply