British banks sued by US investment bank over mis-sold loans

In what many believe is a way of recovering funds lost during the recession, a new wave of lawsuits have been filed against many of the world’s biggest financial institutions.

The latest facing legal action are a number of British banks – the US branches of Barclays, The Royal Bank of Scotland and HSBC, in particular – who are being sued by an American investment group over mis-sold high-risk loans.

Cambridge Place Investment Partners (CPIP), based in Massachusetts, filed the lawsuit in Boston last week.
In the lawsuit, the banks are accused of negligence (it is presumed that they will have professional indemnity insurance in place to cover these kinds of legal issues) in packaging mortgage-supported loans, and also of repeating “untrue statements” issued by sub-prime lenders in sales pitches.

CPIP are also reportedly taking legal action against a number of other iconic financial institutions over similar allegations, including JP Morgan, Credit Suisse, Morgan Stanley, and the already-beleaguered Goldman Sachs.

Their lawsuit states:

“The Wall Street bank defendants fostered the environment for, permitted, and profited from the mortgage originators’ rampant violations of sound lending practices,”

“Driven to profit from the lucrative securitisation business, the defendants demanded enormous volumes of loans, leading to erosion in lending standards.”

Leave a comment