The NCUA has sued RBS Securities for $685 million, alleging that that firm misled Western Corporate FCU (WesCorp) when it sold it mortgage-backed securities that led to its ultimate collapse.
The lawsuit, which was filed on July 18 in federal court in Los Angeles, is the third lawsuit filed by the NCUA stemming from the collapse of five corporate credit unions and the second against RBS. The agency said it plans to file between five and 10 lawsuits.
The NCUA's lawsuit alleges that the sellers and underwriters of the questionable securities 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, according to the suit. The agency conserved the $19.3 billion WesCorp on March 20, 2009, the same day it took over the $30 billion U.S. Central Corporate Credit Union, the largest wholesale credit union
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