US Department of Justice sues Barclays over mortgage securities
Barclays is accused by the DoJ of selling more than US$30bn of mortgage securities that helped fuel the financial crisis.
Barclays is accused by the DoJ of selling more than US$30bn of mortgage securities that helped fuel the financial crisis.
The US Justice Department is allegedly suing Barclays as the bank is being accused of fraudulently selling more than US$30bn of mortgage securities that helped fuel the financial crisis, after long-running settlement negotiations broke down.
The complaint was filed on Thursday against the UK’s second-largest bank. The civil lawsuit accuses the bank of repeatedly deceiving investors about the quality of loans underlying the tens of billions of dollars’ worth of mortgage securities sold between 2005 and 2007, according to The Guardian.
The government complaint didn’t quantify the damages it is seeking from Barclays.
Barclays said in a statement that it would seek the suit’s “dismissal at the earliest opportunity,” and that it considers the claims “disconnected from the facts.” Bank officials declined to elaborate on why the talks broke down, but one person familiar with the matter said that continuing the talks under “a fresh pair of eyes” – in a new presidential administration – might be more beneficial.
Barclays chief executive officer (CEO) Jes Staley recently said that the bank wouldn’t give US authorities a blank check, and wouldn’t settle if he felt the price was too high, according to people familiar with the discussions.
The Barclays suit comes as the Justice Department is deep in negotiations over mortgage securities with two other big European banks; Deutsche Bank AG and Credit Suisse Group AG. While those talks are progressing, they have yet to reach a point that suggests a settlement is certain.
Barclays is one of several banks that has been under investigation over alleged misconduct.