HSBC to pay $765m to settle mortgage-backed securities claims

HSBC to pay $765m to settle mortgage-backed securities claims

  09 Oct 2018

HSBC has agreed to pay $765m (£583m) to settle claims connected to toxic derivatives it sold prior to the financial crisis that rocked global markets in 2007.

In a statement announcing the deal, the Department of Justice said that federally-insured financial institutions and others suffered “major losses” from investing in Residential Mortgage-Backed Securities (RMBS) that were issued and underwritten by the lender.

“HSBC made choices that hurt people and abused their trust,” said Bob Troyer, US Attorney for the District of Colorado.  

“HSBC chose to use a due diligence process it knew from the start didn’t work.  It chose to put lots of defective mortgages into its deals. When HSBC saw problems, it chose to rush those deals out the door.”

The London-based lender entered into the settlement without admitting liability or wrongdoing.

Patrick Burke, the president and chief executive of HSBC USA said: “We are pleased to put this investigation related to activity that occurred more than a decade ago behind us.”

He added: “Since the financial crisis, HSBC has been strengthening our culture, processes and internal controls to ensure fair outcomes for our clients.”

HSBC’s settlement is substantially lower than the billions paid by other banks to resolve misconduct linked to RMBS transactions prior to the financial crisis.

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