BBR Staff Writer[1] Published 02 April 2018

UK-based Barclays Capital has signed an agreement with the US Department of Justice (DoJ) to pay $2bn to settle claims related to its residential mortgage-backed securities (RMBS).

The company has agreed to pay civil penalties for alleged conduct related to underwriting and issuance of RMBS between 2005 and 2007. 

Barclays is paying $2bn in civil penalties in exchange for dismissal of the amended complaint.

The watchdog three-year investigation revealed that Barclays caused billions of dollars in losses to investors by involving in a fraudulent scheme to sell 36 RMBS deals, resulting in misled of investors regarding the quality of the mortgage loans backing those deals.

According to DoJ, Barclays alleged violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), based on mail fraud, wire fraud, bank fraud, and other misconduct. 

The regulator has also reached agreement with the two former Barclays executives, who have been named as defendants in the suit.

 Paul Menefee from Menefee of Austin as Barclays’ head banker on its subprime RMBS securitizations, while John T. Carroll from Port Washington of New York served as Barclays’ head trader for subprime loan acquisitions.

Menefee and Carroll agree to pay $2m in civil penalties to the watchdog in exchange for dismissal of the claims against them.

The United States Attorney for the Eastern District of New York Richard Donoghue said: “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.”

“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.”

Barclays CEO Jes Staley said: “I am pleased that we have been able to reach a fair and proportionate settlement with the Department of Justice. It has been a priority for this management team from the start to resolve these historic issues in a timely and appropriate manner wherever possible.”

Image: Barclays head office in London. Photo: courtesy of Secretlondon.


  1. ^ BBR Staff Writer (policiesandregulatorycompliance.banking-business-review.com)

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