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Nomura to pay US$480M to settle US mortgage-backed securities claims

Nomura Holding America Inc. and some of its affiliates have agreed to pay US$480 million to settle civil claims that the company misled investors in marketing and selling residential mortgage-backed securities before the 2008 global financial crisis.

The Nomura Holdings Inc. unit was accused of misleading investors about the quality of mortgage loans that were bundled into marketable securities between 2006 and 2007, resulting in "significant losses" to investors such as Fannie Mae and Freddie Mac, according to the U.S. Justice Department.

In a statement, Nomura said its U.S. subsidiaries did not admit any wrongdoing in relation to the settlement and disputed the allegations. It also estimated that the settlement will cause about ¥20 billion of negative impact on its results for the second quarter ended Sept. 30.

The settlement was the result of a probe by the U.S. Attorney's Office for the Eastern District of New York.

In 2015, Nomura and Royal Bank of Scotland Group PLC were ordered to pay a total of US$839 million over allegations that they misrepresented mortgage-backed securities sold to Fannie Mae and Freddie Mac. The two companies challenged the ruling on several grounds, including that the loss of the securities' value was not caused by any false statements but by the financial crisis in 2008. A unanimous panel of the U.S. Court of Appeals for the 2nd Circuit in New York rejected the companies' appeal in 2017.

As of Oct. 16, US$1 was equivalent to ¥112.17.