Barclays fined $2 billion over US fraud claims
29 Mar 2018

Barclays has agreed to pay $2 billion to settle a case over a fraudulent scheme that sold residential mortgage-backed securities (RMBS) and cost investors billions.

According to the United States Department of Justice, the scheme involved 36 RMBS deals and Barclays misled investors about the quality of the mortgage loans backing those deals.

“In general, the borrowers whose loans backed these deals were significantly less creditworthy than Barclays represented, and these loans defaulted at exceptionally high rates early in the life of the deals,” a DoJ statement explained.

“ In addition, as alleged in the complaint, the mortgaged properties were systematically worth less than what Barclays represented to investors. These are allegations only, which the Defendants dispute, and there has been no trial or adjudication or judicial finding of any issue of fact or law.”

Two former Barclays executives named as defendants in the suit also agreed to pay $2 million in exchange for dismissal of the claims against them.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, said: “The substantial penalty Barclays and its executives have agreed to pay is an important step in recognizing the harm that was caused to the national economy and to investors in RMBS.”

Barclays Chief Executive Jes Staley, quoted in Reuters, said: “I am pleased that we have been able to reach a fair and proportionate settlement with the Department of Justice. It has been a priority for this management team from the start to resolve these historic issues in a timely and appropriate manner wherever possible.”

Read more:

UK uses Criminal Finances Act to seize $500 million from HSBC account

US: Deutsche bank fined for misleading customers

Confessions of a compliance officer: How I handled dodgy demands

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