) heaved a sigh of relief when the U.S. District Judge in Kansas
City dismissed a case by National Credit Union Administration
(NCUA) - the U.S. regulator for credit unions. The lawsuit had
accused the company of selling risky mortgage based securities
(MBS) worth approximately $555 million from 2006-2007.
While dismissing the case, the U.S. District Judge stated that
the NCUA had waited too long to file the case against Barclays.
The chargesheet should have been lodged within 3 years (by Mar
20, 2012) of the NCUA being named the conservator of credit
unions. However, the case was filed in Sep 2012.
Barclays was accused of selling MBS to 2 corporate credit unions
- the U.S. Federal Credit Union and the Western Corporate Federal
Credit Union - leading to their failure in 2009. Since then, the
NCUA has been trying to recover the losses.
The dismissal of the case is a setback for the NCUA. The
regulator had sued 10 major global banks on similar charges.
Out of these,
Bank of America Corporation
), Deutsche Bank AG,
HSBC Holdings plc
) and Citigroup Inc. settled their respective cases with the
NCUA, thereby enabling the regulator to recover roughly $335
million. However, Credit Suisse Group, Goldman Sachs Group Inc.,
Wells Fargo & Company,
JPMorgan Chase & Co.
) and UBS AG continue to face similar charges from the NCUA.
The dismissal of the case removes a legal headwind for Barclays.
However, the company still faces a number of lawsuits related to
its conduct during the financial crisis. Though the London
Interbank Offered Rate (LIBOR) manipulation scandal led to a fine
of £290 million ($453 million) in Jun 2012, Barclays has moved
forward to regain investors' confidence through various
Currently, Barclays carries a Zacks Rank #3 (Hold).
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