Barclays Capital Inc. (BARC) has consented to pay $15 million to the U.S. Securities and Exchange Commission to resolve civil charges claiming that it did not make sure the financial institution was in proper compliance with securities laws and its own rules after acquiring Lehman Brothers’ advisory division. According to the regulator, the firm did not adopt and execute written procedures and policies or keep up the needed records and books to stop certain violations.
For example, says the SEC, Barclays executed over 1,500 principal transactions with advisory client accounts but did not seek the necessary written disclosures and get the requisite customer consent. It also made money and charged fees and commissions that were not consistent with disclosures for 2,785 advisory client accounts, underreported assets under management by $754 million when amending its Form ADV a few years ago, and violated the Advisers Act’s custody provisions.
The violations caused clients to lose about $472,000 and pay more than they should have, while Barclays made additional revenue that was greater than $3.1 million. Barclays has since paid back or credited $3.8 million plus interest to customers who were affected. It also consented to remedial action and will retain a compliance consultant to perform an internal review.
Meantime, across the Atlantic, the U.K. Financial Conduct Authority also fined Barclays PLC. The amount is $61.7 million for not safeguarding client assets at the bank.
According to the British regulator, About 16.5 billion pounds in client assets were placed at risk between 11/07 and 1/12 due to poor arrangements between the bank and external custodians that were retained to deal with client trades and settlement.
Barclays accepts the FCA’s findings but maintains that it didn’t make money from these issues and customers did not sustain losses. A bank spokesperson said that Barclays identified and self-reported the matters that led to the FCA’s findings and it has since improved systems to resolve such problems and make sure the necessary processes are implemented.
The British regulator’s fine comes four months after the FCA fined it 26 million pounds for control failings over settling gold prices. The bank also put aside over $1.6 billion pounds for customers that were sold insurance they didn’t require or interest-rate swaps that led to losses.
Also in the UK, Barclays settled a lawsuit by client CF Partners LLP accusing it of offering advice on a takeover bid then buying carbon-trading firm Tricorona AB for itself. The resolution was reached after a judge ruled that the bank wrongly used confidential information to make its purchase.
Barclays Fined Twice in One Day for Compliance Failures, Bloomberg, September 23, 2014
Read the SEC Order (PDF)
Barclays Fined $62 Million by U.K.’s FCA, The Wall Street Journal, September 23, 2013
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