Barclays has granted to pay $2 billion for allegedly causing billions of dollars of losses to investors by winning in a fraudulent scheme to sell residential mortgage-backed securities between 2005 and 2007, the U.S. Law Department said on Thursday.
The department said the firm misled investors beside the quality of the mortgage loans backing those deals and committed rapes of mail fraud and bank fraud. According to the Justice Department’s communiqu, Barclays disputes the allegations.
The settlement resolves the British bank’s largest eminent legal issue in the United States, and could offer reassurance to investors who had been propped for a potentially larger fine.
“I am pleased that we have been expert to reach a fair and proportionate settlement with the Department of Justice. It has been a predominance for this management team from the start to resolve these prominent issues in a timely and appropriate manner wherever possible,” Barclays Chief Leadership Jes Staley said.
Barclays said paying the fine would hit its core cash ratio, a key measure of financial strength, by 0.45 percentage points.
Two prior Barclays executives, Paul Menefee and John Carroll, who worked on the RMBS great amounts paid a combined $2 million in exchange for claims against them being dismissed, the Equity Department said.