An American investment firm has accused HSBC, Barclays and RBS mis-selling £1.6bn in mortgage -backed securities.
Cambridge Place Investment Partners, a Boston based fund, is suing US branches of the three British banks in a newly filed suit.
In addition, it is targeting Morgan Stanley, JP Morgan, Citigroup, Merrill Lynch, Goldman Sachs, Credit Suisse, UBS and Deutsche Bank. This could prove to be a test case for funds seeking restitution for losses incurred during the financial crisis.
The lawsuit states that HSBC, Barclays and RBS all sold mortgage-backed securities based on "untrue statements". Cambridge Place claims that the "mortgage originators" at fault, that is, the sub-prime lenders who were responsible for assessing borrowers and for skewing the truth regarding the worth of the loans.
It states that the banks acted improperly and did not undertake due diligence prior to packaging the loans as financial instruments, repeatedly making untrue statements with regard to the sub-prime mortgages in their prospectuses as well as during sales pitches.
It is said that the banks often had reps on site at the mortgage lenders and presented them with billions of dollars in credit which the suit alleges meant that they were "complicit in creating an environment of improper lending practices".
Barclays has been accused of selling mis-sold mortgages to the tune of $141m between 2005 and 2007, HSBC $64m between 2005 and 2006 and RBS $260m between 2005 and 2007..
Barclays loans had the greatest delinquency rate, at 46 per cent between 2005 and 2007, wth the HSBC delinquency rate being 40 per cent between 2005 and 2006. Moreover, the RBS delinquency rate was 35 per cent between 2005 and 2007.
The New York law firm Bernstein Litowitz Berger and Grossman is handling the case for the plaintiffs.
Mis-sold Mortgage Claims > Mortgage News
UK Banks to Face US Missold Mortgages Suit
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