Accounting Error Leads to Fraud Investigation at Metro Bank
When credit managers hear the word "fraud," some will jump to the conclusion that the perpetrators are adversaries outside the company. However, in the case of Metro Bank in the U.K., investors allege that securities fraud has taken place within the bank in addition to "other unlawful business practices."
According to The Guardian, two New York-based law firms have announced the start of a new investigation into the bank's operations, with a third investigation underway that began in early May. Glancy Prongay & Murray, a national class action litigation law firm, started the first investigation after an accounting error that "misclassified £900m worth of loans as being less risky than they actually were."
"Banks are required to put aside more cash to cover their riskier products, to ensure they are protected in the event of a sudden downturn," The Guardian reported.
The error led to a significant drop in shares as well as the loss of big clients. In response to the current allegations, a Metro Bank spokesperson said these investigations are "commonplace."
"Metro Bank has engaged heavily with investors over the last few months and their strong support for the business was recently demonstrated in the successful £375m capital raise," Metro Bank states.
—Andrew Michaels, editorial associate