British banks accused in US of mis-selling

Tim Wallace
Follow Tim
BARCLAYS and RBS are among nine banks accused of misrepresenting mortgage-backed securities worth hundreds of millions of dollars sold to US credit unions in 2006 and 2007, court papers filed yesterday show.

The National Credit Union Administration (NCUA) claims five credit unions collapsed because they purchased faulty securities, and the investment banks underwriting or selling them should be held responsible for misrepresenting them.

The unions paid Morgan Stanley $416m (£260m), and are taking eight other banks to court over payments totalling $1.9bn for other securities.

Those banks are Alley Securities, Barclays Capital, Bear Stearns and JP Morgan, Credit Suisse, Goldman Sachs, RBS, UBS and Wachovia.

The filings say Barclays issued or underwrote securities purchased for $293m and RBS was behind $312m.

“We continue to pursue accountability and recovery in the wake of billions of dollars in sales of faulty securities that led to the collapse of several corporate credit unions and handed the industry the costly bill of paying for the losses,” the NCUA’s Debbie Matz said.

RBS and Barclays declined to comment on the filings.