Banking giant HSBC paid a $765m (£582m) fine yesterday over allegations it deliberately sold “contaminated” mortgage-backed securities to investors in the period leading up to the financial crisis.
The US Department of Justice (DoJ) accused HSBC of intentionally “misrepresenting to investors” the quality of controversial residential mortgage-backed securities (RMBS), a type of loan that has been cited as a contribution factor in the 2008 financial crisis.
The DoJ alleged HSBC was made aware of the “abnormally large” and “alarmingly” high number of payment defaults, an indicator of potential forthcoming losses.
The agency further reported that one HSBC trader referred to an RMBS as a product that “will suck”, before the bank then sold it on.
The bank said the agreement to enter into the financial settlement was made “without admitting liability or wrongdoing”.
HSBC USA chief executive Patrick Burke said: “Since the financial crisis, HSBC has been strengthening our culture, processes and internal controls to ensure fair outcomes for our clients.”
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