US sues Barclays over securities
The US Justice Department sued the British financial giant Barclays on Thursday, accusing the bank of massive fraud in the sale of mortgage-backed securities which contributed to the global financial crisis of 2008. Barclays was one of several major banks implicated in the crisis, along with Deutsche Bank, Royal Bank of Scotland and Credit Suisse, that so far have not reached settlements with US authorities over their roles in the financial meltdown, causing jitters among investors.
Thursday’s move to sue in open court stood out, with the Justice Department choosing not to seek a mutually acceptable resolution, as it has in most cases when taking enforcement action against major financial institutions. In a statement, the bank said it would “vigorously defend” itself against the allegations. “Barclays rejects the claims made in the complaint,” the statement said. “Barclays considers that the claims made in the complaint are disconnected from the facts.”
The government’s complaint filed in federal court also named two former Barclays executives - Paul Menefee, former head banker in charge of due diligence for Barclays so-called subprime, or higher risk, residential mortgagebacked securitizations, and John Carroll, who served as Barclays’ head trader for subprime loan acquisitions. The Justice Department has faced stiff criticism for its perceived failure to hold senior executives to account following the financial crisis. No major figures have suffered criminal conviction.
Federal prosecutors say that as part of the alleged scheme Barclays sold $31 billion in securities which packaged poor-quality subprime and Alt-A mortgages to investors around the world, more than half of which defaulted after Barclays deliberately and systematically lied to investors about the loans. — AFP
LONDON: This file photo shows Barclays bank headquarters in Canary Wharf. — AFP