On Thursday, March 29, Barclays Capital Inc. and several of its affiliates (together, Barclays)–as well as two former Barclays executives–agreed to settle a three-year Department of Justice (DOJ) investigation concerning Barclays’ marketing and sale of residential mortgage-backed securities (RMBS) between 2005 and 2007.

The lawsuit was commenced by the United States Attorney’s Office for the Eastern District of New York in December 2016. The action, filed in the United States District Court for the Eastern District of New York in Brooklyn, alleged that Barclays caused billions of dollars in investor losses by engaging in a fraudulent scheme to sell $31 billion in subprime and Alt-A mortgage loans across 36 different RMBS securitizations, misleading investors about the quality of the mortgage loans backing those securitizations. More than half of the mortgage loans serving as collateral for those 36 RMBS securitizations had defaulted, and these deals helped fuel the 2008 financial crisis. The DOJ complaint alleged violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) based on mail fraud, wire fraud, bank fraud, and other predicate offenses.

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