Barclays' sanctions violations settlement refused approval by judge

18 August 2010

Barclays' proposed $298 million settlement with the US government over allegations that it violated sanctions to trade with five countries has been refused approval by the judge in the case.

The bank had been accused of breaking sanctions relating to Cuba, Libya, Iran, Sudan and Burma in a period running from around March 1995 through to September 2006.

Earlier this week, Barclays had agreed to pay $149 million to the US, with a further $149 million going to the state of New York, reports Bloomberg.

However, US district judge Emmet Sullivan has refused to endorse the settlement, describing it as a "sweetheart deal".

He has scheduled a hearing for today (August 18th 2010) after asking prosecutors: "Why isn't the government getting tough with the banks?"

It is the third time in 12 months that a judge has ruled against a settlement between a bank and the US.

Last August, district judge Jed Rakoff rejected a proposed $33 million deal between Bank of America and the Securities and Exchange Commission (SEC) in a case regarding alleged misstatements on the financial institution's subprime mortgage holdings.

In February, he approved a $150 million settlement on the matter, but said that his support for the deal was reluctant and described it as an "inaccurate and misguided" agreement.

Meanwhile this week, district judge Ellen Huvelle has held up a $75 million settlement between the SEC and Citigroup regarding accusations that the bank made misstatements on earnings calls and in financial filings about assets tied to subprime loans during the 2007 housing crisis.

A new hearing on the matter has been scheduled for September 24th 2010.

Last December, Credit Suisse was ordered to pay $536 million after admitting to violating sanctions relating to transactions with Iranian companies following an investigation into its activities in the country between 2002 and 2007.

By Gary Cooper

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