British Banks among 13 Facing Fraud Claims in US
13 banks are facing allegations of fraud in the US state of Virginia and there are three British banks amongst those.
Barclays, HSBC and the bailed out Royal Bank of Scotland are among the 13 and they’re facing a claim of $1.15bn (£700m) in damages in the US state of Virginia over the sale of mortgage bonds during the financial crisis.
Of course, this isn’t the only thing that these big British banks have found themselves in hot water over. Since the mid-2000s, when the PPI mis-selling scandal came to light, they’ve had to set aside billions of pounds in order to fairly compensate the millions of people who were mis-sold payment protection insurance.
Mis-Selling and Scandal
The Virginia attorney general, Mark Herring has made the accusations against the 13 which relate to the sale of bonds to the state’s retirement fund from 2004 to 2010. According to Mr. Herring, the 13 banks packaged up very risky home loans as part of the bonds or securities.
These bonds and securities were then sold on to the Virginia Retirement System as AAA-rated bonds and the fund has the best part of 600,000 members which include teachers, employees from the city and county governments, state troopers and court employees.
There was a case filed in the Richmond Circuit Court which shows the actions of the banks in the run-up to the financial crisis. They continued to come under scrutiny by the authorities, potentially undermining attempts by banks to improve their reputations that had been repeatedly knocked by allegations about their behaviour.
According to the allegations, the banks fraudulently misrepresented the quality of the mortgages that they packaged up and sold to investors such as the Virginia Retirement system.
The allegations suggest that 40% of the mortgages that were sold on to the retirement fund had a higher risk of default than what was disclosed at the time that they were purchased. This led to $383m worth of losses.
HSBC has recently been under scrutiny for the mis-selling of mortgages in the US and they have recently agreed to pay $550 million to settle the dispute.
This was paid in order to settle a dispute where HSBC holdings faced $1.6bn in damages should the ruling have gone against them. To read more about this, click here.
If you think you have been mis-sold PPI, why not start your claim with us today by filling in our form online, or you can download yourself a PPI claim form and fill it in and get it sent back to us to launch your claim today.