Barclays share price subdued as US sues group over mortgage securities fraud

on Dec 23, 2016
Updated: Mar 11, 2020

Shares in Barclays (LON:BARC) have fallen into the red in London this morning, as the US said that it was suing the bank on civil charges of fraud in the sale of mortgage-backed securities during the run-up to the financial crisis. The move marks the latest legal challenge for the group which earlier this week was fined in Switzerland for participation in an interest rate cartel.

As of 09:23 GMT, Barclays’ share price had lost 0.79 percent to 225.20p, underperforming the benchmark FTSE 100 index which is currently 0.01 percent worse off at 7,062.75 points. The group’s shares have gained nearly three percent this year, as compared with an over 13-percent rise in the Footsie.
The US Department of Justice announced in a statement yesterday that it had filed a civil complaint against Barclays, alleging that the group had engaged in a fraudulent scheme to sell residential mortgage-backed securities supported by defective and misrepresented mortgage loans. The DoJ alleges that, from 2005 to 2007, Barclays personnel repeatedly misrepresented the characteristics of the loans backing securities they sold to investors throughout the world who incurred billions of dollars in losses as a result of the scheme.

“Financial institutions like Barclays occupy a position of vital public trust,” Attorney General Loretta Lynch said in the statement. “As alleged in this complaint, Barclays jeopardized billions of dollars of wealth through practices that were plainly irresponsible and dishonest.”
The FTSE 100 bank noted in a statement this morning that it rejected the claims made in the complaint and considered that they were “disconnected from the facts”.
“Barclays will vigorously defend the Complaint and intends to seek its dismissal at the earliest opportunity,” the bank pointed out.
As of 09:56 GMT, Friday, 23 December, Barclays share price is 224.15p.