Barclays Capital has agreed to pay $2 billion in civil penalties to settle a 2016 civil action alleging the bank fraudulently sold residential mortgage-backed securities between 2005 and 2006, the Justice Department said Thursday morning.
The department said Barclays misled investors about the quality of the mortgage loans and committed mail fraud, wire fraud, and other allegations.
More than half of 36 residential backed mortgage securities with a total value of more than $31 billion ultimately defaulted, according to prosecutors.
As a result of Barclay’s alleged actions, investors lost billions of dollars, the Justice Department said.
The London-based company has denied the allegations.
The Justice Department said has reached a settlement with two former Barclays executives who were named in the suit. Paul K. Menifee, of Austin, Texas, and John T. Carroll, of Port Washington, New York, have agreed to pay $2 million to settle the claims against them, the department announced.
“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,” said Richard Donoghue, U.S. attorney for the Eastern District of New York. “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.”
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