BROOKLYN, NY – Barclays Capital, Inc. and several of its affiliates have agreed to settle a civil action filed in December 2016 regarding their alleged conduct in the underwriting and issuance of residential mortgage-backed securities (RMBS) between 2005 and 2007. The company will pay the United States two billion dollars ($2,000,000,000) in civil penalties in exchange for dismissal of the Amended Complaint.
The civil action, United States v. Barclays Capital, Inc., alleged that the company caused billions of dollars in losses to investors by engaging in a fraudulent scheme to sell 36 RMBS deals. The complaint claimed that Barclays misled investors about the quality of the mortgage loans backing those deals, and 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 settlement also includes former Barclays executives Paul K. Menefee and John T. Carroll, who served as head banker and head trader for subprime loan acquisitions, respectively. In exchange for dismissal of the claims against them, Menefee and Carroll agreed to pay the United States the combined sum of two million dollars ($2,000,000) in civil penalties.
The settlement was announced by Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Laura S. Wertheimer, Inspector General for the Federal Housing Finance Agency (FHFA-OIG).
“This settlement reflects the ongoing commitment of the U.S. Attorney’s 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.”
The scheme alleged in the complaint involved 36 RMBS deals in which over $31 billion worth of subprime and Alt-A mortgage loans were securitized, more than half of which loans defaulted. The complaint alleged that in publicly filed offering documents and in direct communications with investors and rating agencies, Barclays systematically and intentionally misrepresented key characteristics of the loans it included in these RMBS deals.
The government’s case has been handled by this Office’s Civil Division. Senior Counsel F. Franklin Amanat, and Assistant United States Attorneys Matthew R. Belz, Charles S. Kleinberg, Evan P. Lestelle, Matthew J. Modafferi, Josephine M. Vella, and Alex S. Weinberg have been in charge of the litigation.
The defendants in this case are Barclays Capital, Inc. (a Delaware corporation); Barclays Bank PLC (a UK corporation); Barclays Bank Delaware (a Delaware banking corporation); Barclays Capital Real Estate Inc. (a Delaware corporation); Paul K. Menefee (an individual); and John T. Carroll (an individual). The charges include mail fraud, wire fraud, bank fraud, and other misconduct under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). The agreement was reached in December 2016.
The settlement was announced on December 2016. Barclays Capital, Inc. agreed to pay $2,000,000,000 in civil penalties. Paul K. Menefee and John T. Carroll agreed to pay $2,000,000 in civil penalties. Barclays Capital, Inc. and its affiliates agreed to settle a civil action filed in December 2016.
Key Facts
- State: New York
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
ðŸâ€Â’ Get the grimiest stories delivered weekly. Subscribe free →
