Wells Fargo & Co, Royal Bank of Scotland Group Plc and Deutsche Bank AG have reached a $165 million class-action settlement over their underwriting for the now-bankrupt subprime lender NovaStar Mortgage Inc.

It resolves claims that offering materials prepared by the banks misled investors into believing that loans underlying roughly $7.55 billion of NovaStar mortgage-backed securities they bought were properly underwritten, and were safe.

Read on.

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