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Illinois settles with Royal Bank of Scotland for $20 million in securities case

The Illinois Attorney General is suing the creator of such events as all you can eat crab fests and 5K zombie races in Illinois and around the country because they turned out to be about as real as zombies.

The Illinois Attorney General Lisa Madigan is suing the creator of such events as all you can eat crab fests and 5K zombie races in Illinois and around the country because they turned out to be about as real as zombies. | Ashlee Rezin / Sun-Times

The state of Illinois has reached a $20 million settlement with the Royal Bank of Scotland resulting from the bank’s marketing and sale of mortgage-backed securities a decade ago.

Attorney General Lisa Madigan’s office said the settlement resolves an investigation into allegations the bank failed to disclose the true risk of its investments.

Proceeds of the settlement will be distributed among the Teachers’ Retirement System of Illinois, the State Universities Retirement System and the Illinois State Board of Investment, which oversees the State Employees’ Retirement System.

A message requesting comment left with the Royal Bank of Scotland in Edinburgh was not returned.

Madigan’s office says it has recovered more than $475 million for Illinois pension systems as a result of pursuing “fraudulent conduct in the mortgage-backed securities market.”

It previously reached settlements with JPMorgan Chase for $100 million, Citigroup for $44 million, Bank of America for $300 million, Morgan Stanley for $22 million and Goldman Sachs for $25 million.