Market updates and sector developments

Nomura Securities International (NSI) has agreed to pay a US$35m penalty to the district of Connecticut and US$800,000 in additional restitution payments over alleged historical fraudulent trading of RMBS. The settlement is part of a non-prosecution agreement between NSI and the US Attorney’s Office for the district.

The DOJ investigation found that the Japanese investment bank’s US broker-dealer subsidiary “perpetrated a scheme from 2009 to 2013 to defraud its customers in RMBS trades”. The federal government alleged that NSI and employees primarily based in its New York office conducted the so-called scheme to increase profits at the expense of its customers.

In a statement, the prosecuting office said that traders “lied to the [buyers] about the seller’s asking price — or vice versa” in certain transactions. It added: “In other transactions, NSI traders misrepresented to the buyer that bonds held in NSI’s inventory were being offered for sale by a fictitious third-party seller, which allowed NSI to charge the buyer an extra, unearned commission.”

Nomura says it is pleased to have resolved the matter, grateful that the DOJ recognised its remediation and cooperation, and that the resolution will have no financial impact given that “sanctions were recognised in prior periods”. The agreement comes a week after UBS agreed to pay US$1.435bn to settle a case relating to historical alleged misconduct surrounding the underwriting and issuance of RMBS prior to the financial crisis (SCI 15 August).

In other news…

Arrow fully acquires Maslow

European credit- and real estate-focused asset manager Arrow Global is to wholly acquire real estate direct lending firm Maslow Capital. The agreement follows Arrow’s previous acquisition of a minority stake in the business in December 2021.

Maslow originates, underwrites and services real estate loans ranging from £10m to £300m for UK residential projects. Arrow has recently made similar acquisitions, including the bolt-ons of Eagle Street Partners and Blue Current Capital.