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Courts

RBS settles with Illinois over RMBS sales; $20 million to be dispersed to pension funds

Two Illinois state pension funds and the Illinois State Board of Investment will each share the $20 million settlement the state reached with the Royal Bank of Scotland over the marketing and sale of risky residential mortgage-backed securities prior to 2008.

The settlement proceeds will go to the $51.4 billion Illinois Teachers' Retirement System, Springfield; the $19.2 billion Illinois State Universities Retirement System, Champaign; and the $18.3 billion ISBI, according to a news release from the office of Lisa Madigan, Illinois attorney general. ISBI manages the assets of the Illinois State Employees' Retirement System, Illinois General Assembly Retirement System and Illinois Judges' Retirement System.

The Illinois settlement announcement is the latest involving accusations of misconduct against RBS over its marketing and sale of RMBS. The bank reached a $4.9 billion settlement with the U.S. attorney's office in Massachusetts over the same claims, while in March, the New York state attorney general's office reached a $500 million settlement with RBS.

A spokesman for Ms. Madigan could not be immediately reached for details on the settlement disbursement; an RBS spokesman also couldn't be reached for comment.