US sues Bar­clays over se­cu­ri­ties

Kuwait Times - - BUSINESS -

WASH­ING­TON:

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

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.