The National Credit Union Administration this week sued Barclays for violating federal and state securities laws through misrepresentations in the sale of 2006 and 2007 vintage mortgage-backed securities to two now-defunct corporate credit unions.
Barclays declined to comment on the lawsuit which was filed in Federal District Court in Kansas.
The complaint is similar to others that NCUA filed against a handful of Wall Street firms that issued and sold nonprime MBS to corporate (wholesale) credit unions that later failed. Three investment banking defendants have settled, paying out claims worth more than $170 million, according to NCUA.
In the Barclays case, in addition to alleging misrepresentations, NCUA claims the bank omitted material facts in the offering documents related to MBS that were sold to U.S. Central Federal Credit Union and Western Corporate Federal Credit Union for more than $555 million.
NCUA also charges that that there was “systematic disregard of the underwriting guidelines stated in the offering documents” and that as a result of this, the corporate credit unions “believed the risk of loss was minimal, when in fact it was substantial.”