Barclays to pay US$2 billion fine for fraud during run-up to 2008 financial crisis
Federal prosecutors also reached settlements with two former Barclays executives over their roles in the sale and trading of residential mortgage-backed securities
British banking giant Barclays has agreed to pay a US$2 billion fine to resolve a fraud case involving mortgage derivatives sold in the run-up to the 2008 global financial crisis, the US Justice Department said Thursday.
Authorities said the loans underlying the investment vehicles “were significantly less creditworthy than Barclays represented,” and the company “intentionally misrepresented” key facts about the mortgages involved.
Federal prosecutors also reached settlements with two former Barclays executives over their roles in the sale and trading of residential mortgage-backed securities (RMBS), a type of investment derivative that bundled home loans into securities sold to investors.
Paul Menefee of Austin, Texas, the former head banker for subprime RMBS securitizations at Barclays, and John Carroll of Port Washington, New York, former head trader for subprime loan acquisitions, will pay a combined total of US$2 million.