Nomura and Royal Bank of Scotland lost a U.S. court appeal on Thursday to overturn an order requiring them to pay $839 million for making false statements while selling mortgage-backed securities to Fannie Mae (FNMA.PK) and Freddie Mac(FMCC.PK).
Reuters reports that the two banks had challenged the 2015 award on multiple grounds, including that the loss of the securities’ value was largely caused not by any false statements, but by the broader financial crisis in 2008.
A unanimous panel of the U.S. Court of Appeals for the 2nd Circuit in New York, however, rejected that and other arguments.
“Defendants may not hide behind a market downturn that is in part their own making simply because their conduct was a relatively small part of the problem,” Circuit Judge Richard Wesley wrote on behalf of the panel.
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