Barclays Agrees $2 Billion U.S. Settlement Over Mortgage-Backed Securities
March 29 2018 - 10:06AM
Dow Jones News
By Adam Clark
The U.S. Department of Justice said on Thursday that Barclays
PLC (BARC.LN) has agreed to pay $2 billion in civil penalties to
resolve claims for fraud in the sale of residential mortgage-backed
securities, or RMBS.
The Department of Justice said the settlement will dismiss the
civil action filed in December 2016, which alleged Barclays caused
billions of dollars in losses to investors in deals involving over
$31 billion of securitized mortgage loans between 2005 and
2007.
The filed complaint alleged that Barclays systematically and
intentionally misrepresented key characteristics of the loans, with
the borrowers being significantly less creditworthy than
represented, leading to exceptionally high default rates early in
the life of the deals.
An agreement has also been reached with former Barclays
executives Paul Menefee, former head banker of subprime RMBS
securitizations, and John Carroll, former head trader for subprime
loan acquisitions. The two former executives have agreed to pay a
combined $2 million in civil penalties.
Barclays said it will recognize the penalty in its first-quarter
results for 2018, resulting in a 45 basis points hit to its common
equity tier one ratio. The bank said that it remains well
positioned to produce stronger earnings going forward and still
intends to pay a 6.5 pence a share dividend for 2018.
Shares at 1324 GMT were up 0.40 pence, or 0.2%, at 206.40
pence.
Write to Adam Clark at adam.clark@dowjones.com;
@AdamDowJones
(END) Dow Jones Newswires
March 29, 2018 09:51 ET (13:51 GMT)
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