Barclays Agrees to Pay $2 Billion in Civil Penalties

By <the C|C Whistleblower Lawyer Team

Barclays will pay the United States two billion dollars to settle a civil action filed in December 2016 in which the United States sought civil penalties for alleged conduct related to Barclays’ underwriting and issuance of residential mortgage-backed securities (RMBS) between 2005 and 2007. Agreement has also been reached with two former Barclays executives who were named as defendants in the suit. In exchange for dismissal of the claims against them, each executive agreed to pay the United States the combined sum of two million dollars ($2,000,000) in civil penalties.

“This settlement reflects the ongoing commitment of the Department of Justice, and this Office, to hold banks and other entities and individuals accountable for their fraudulent conduct,” stated United States Attorney Donoghue. “The substantial penalty Barclays and its executives have agreed to pay is an important step in recognizing the harm that was caused to the national economy and to investors in RMBS.”

Following a three-year investigation, the DOJ alleged that Barclays caused billions of dollars in losses to investors by engaging in a fraudulent scheme to sell 36 RMBS deals, and that it misled investors about the quality of the mortgage loans backing those deals. Of the $31 billion of mortgages packaged together in these investments, more than half eventually defaulted. Prosecutors said Barclays “systematically and intentionally misrepresented” the quality of these loans to investors.

“The actions of Barclays and the two individual defendants resulted in enormous losses to the investors who purchased the Residential Mortgage-Backed Securities backed by defective loans,” stated FHFA-OIG Inspector General Wertheimer. “Today’s settlement holds accountable those who waste, steal or abuse funds in connection with FHFA or any of the entities it regulates.”

Tagged in: Financial Institution Fraud, Housing and Mortgage Fraud, Securities Fraud,