HSBC to pay $2m to resolve US lawsuit
WASHINGTON: HSBC Holdings Plc has agreed to pay about $2 million to settle a civil fraud lawsuit that alleged the bank improperly attempted to get reimbursement from the federally backed US Small Business Administration (SBA) on bad loans it knew were based on fraudulent or potentially fraudulent information.
Under the SBAExpress loan programme, designed to help startps and small businesses, the SBA guarantees up to half the value of loans made to companies by lenders such as HSBC. According to a complaint made the US government in federal by court in Manhattan, HSBC sought reimbursement for 42 defaulted loans without revealing that borrowers may have submitted false information to the bank to obtain many of the loans, or that the bank had included them on an internal list of fraudulent or potentially fraudulent loans.
The case was initially brought by a whistleblower under the False Claims Act, and the US government intervened in the case.
As part of the settlement, HSBC admitted and accepted responsibility for not informing the SBA of all of the facts indicating that borrowers may have submitted false information on the loans, or that it had identified these loans as fraudulent or potentially fraudulent.
An HSBC spokesman did not immediately respond to a request for comment.