HSBC Holdings Plc has agreed to pay about $2 million (1.60 million pounds) to settle a civil fraud lawsuit that alleged the bank improperly attempted to get reimbursement from the federally backed U.S. Small Business Administration (SBA) on bad loans it knew were based on fraudulent or potentially fraudulent information.
Under the SBAExpress loan program, designed to help startups and small businesses, the SBA guarantees up to half the value of loans made to companies by lenders such as HSBC.
According to a complaint made by the U.S. government in federal court in Manhattan, HSBC sought reimbursement for 42 defaulted loans without revealing that borrowers may have submitted false information to the bank to obtain many of the loans, or that the bank had included them on an internal list of fraudulent or potentially fraudulent loans.
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