Author: Azizur Rahman 1 November 2017
Royal Bank of Scotland has settled a US criminal investigation that accused its traders of lying to clients over investments between 2008 and 2013.
The US Department of Justice said RBS will pay $44m (£33.4m) under the non-prosecution agreement. It related to what US Attorney Deirdre Daly called RBS fostering "a culture of securities fraud."
RBS said it self-reported the issue to the US authorities. The settlement is separate from a penalty that is expected to be imposed on the bank in the US over claims it mis-sold mortgage bonds prior to the 2008 banking crisis.
The current settlement came after RBS was accused of cheating around 30 bank and investment clients over the prices and commissions of assets backed by mortgages.
Attorney Daly had said: "Those in a position of authority taught and encouraged fraudulent trading practices. Worse, those supervisors and compliance personnel then took steps to prevent victims and honest RBS employees discovering and exposing the scheme.
"By entering into this agreement, RBS has admitted the seriousness of its past criminal conduct and made a clean break."
RBS is clearly happy that it has reached a settlement rather than having to face a prosecution. No doubt, Rolls-Royce and Tesco felt the same earlier this year when they escaped prosecution in the UK – instead obtaining deferred prosecution agreements (DPA’s) – for bribery and accounting fraud.
All three cases indicate the importance of shrewd negotiation and cooperation when it comes to trying to avoid a criminal prosecution.
Read our article: OBTAINING A DPA
Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.