By Joe Stonor
The U.K.'s Financial Conduct Authority opened an enforcement investigation into failed mortgage lender Market Financial Solutions.
The FCA said Friday that it was looking into MFS's conduct under its money laundering rules. Mayfair-based MFS collapsed into insolvency last month amid accusations of fraud.
Hedge funds and banks including Barclays, Jefferies and Santander had loaned the company hundreds of millions of dollars. Creditors say that losses linked to the lender are worth at least 1.3 billion pounds ($1.75 billion).
Barclays alone is owed around 500 million pounds by companies associated with MFS, with U.S. hedge fund Apollo Global Management on the hook for around 400 million pounds.
However, Barclays chief executive C.S. Venkatakrishnan said the bank expects to recoup a significant portion of its exposure to the group.
MFS's collapse added to growing negative sentiment around risks in private credit that have added to a selloff in banking stocks across the globe so far this year.
Complex frauds that involve the double pledging of collateral--such as the one alleged against MFS--are causing banks to look again at their exposure to the asset class, analysts at J.P. Morgan said.
MFS's administrator AlixPartners didn't immediately respond to a request for comment.
Write to Joe Stonor at josephmichael.stonor@wsj.com
(END) Dow Jones Newswires
March 20, 2026 10:26 ET (14:26 GMT)
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