Metro Bank PLC's shares tumbled around 10% in morning trading in London on news that three U.S.-based law firms are investigating whether it or its bosses committed securities fraud, The Guardian reported May 30.
Two of the law firms, Pomerantz and Levi & Korsinsky, launched new probes, while Glancy Prongay & Murray confirmed that it was going to continue an investigation it began on behalf of investors in May, according to the report.
The firms did not disclose details of their allegations but two of them cited "possible violations of federal securities laws" as the motive behind the probes, while Pomerantz said it was looking into "securities fraud and other unlawful business practices." They also listed the issues that Metro Bank has been contending with since January, following an accounting blunder in its statements.
Metro Bank ran into trouble in January, when it admitted it had mis-classified the risk of large numbers of commercial and professional buy-to-let property operators' loans, which meant it had to add £900 million to its risk-weighted assets.
It initially claimed to have discovered the mistake itself, before admitting it had been alerted to it by the Bank of England. It had to raise capital to boost its capital buffers as a result, and completed a £375 million equity raising earlier this month.
The lender's share price recovered later on May 30 and was down around 4.5% in early afternoon trade.