Barclays (NYSE:BCS, LON: BARC) has become the latest financial institution to face the wrath of the US Department of Justice which on Thursday filed a lawsuit in New York’s federal court that accuses the bank of deceiving investors about the quality of loans backing tens of billions of dollars of residential mortgage-backed securities in the lead-up to the so-called subprime mortgage financial crisis.
The lawsuit specifies that the conduct at issue took place between 2005 and 2007 and involved deals including $31bn-worth of mortgage loans that turned out to be “catastrophic failures.”
The government’s lawyers called Barclays’ due diligence on the deals a “sham”.
READ: Barclays rejects lawsuit claims ...
Barclays ADRs, which spent the entire Wall Street session lower, ended down 1.8% at $11.07 on Thursday.