Barclays to Pay $2 Billion to Resolve Mortgage Securities Claims -- Update
March 29 2018 - 10:24AM
Dow Jones News
By Adam Clark
U.K. lender Barclays PLC has agreed to pay $2 billion in civil
penalties to resolve claims of fraud in the sale of residential
mortgage-backed securities in the run-up to the financial crisis,
the Justice Department said on Thursday.
The department said the settlement will dismiss a 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.
Barclays is the latest big bank to reach a settlement over
residential mortgage-backed securities. Bank of America Corp.,
Goldman Sachs Group Inc. and Deutsche Bank AG have all reached
multibillion-dollar settlements in recent years.
The settlement removes a major uncertainty that has hung over
the bank's stock valuation for months.
On Thursday, Barclays Chief Executive Jes Staley said, "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."
The filed complaint alleged that Barclays 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.
(END) Dow Jones Newswires
March 29, 2018 10:09 ET (14:09 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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