Societe Generale has agreed to pay a $50m civil penalty to resolve claims that it defrauded investors, including federally insured financial institutions, in the marketing and sale of a residential mortgage-backed security (RMBS).
As part of the agreement, SocGen admitted that it made false representations to prospective investors. Investors suffered significant losses on their investments in the RMBS, the Brooklyn U.S. attorney’s office said.
The settlement included a statement of facts agreed to by SocGen, whereby the French banking group acknowledged responsibility for its conduct.
The bank admitted that it falsely represented to investors that the loans underlying SG 2006-OPT2 were originated generally in accordance with the loan originator’s underwriting guidelines.
“SocGen’s acknowledgement of its misconduct in the securitization of SG 2006-OPT2 was a critical component of this resolution. It severely impacted investors and institutions across the United States, including in this district. Most emphatically, it was not a ‘joke’”, stated United States Attorney Capers.
“We will not tolerate investment banks making false representations to investors – if and when they do so, they will be held accountable.” Mr. Capers extended his grateful appreciation to the Office of the Inspector General for the Federal Housing Finance Agency for its assistance in conducting the investigation in this matter.
As part of the settlement, SocGen has agreed to fully cooperate with any ongoing investigations related to the conduct covered by the agreement.