SEC hits Barclays with $360mn penalty over $18bn sale error
Barclays has agreed to pay $361mn to settle charges that a clerical error led the UK bank to offer for sale billions of dollars worth of structured financial products that it was not permitted to trade.
The error dated from 2019 to March this year, when Barclays offered $17.7bn worth of products that had not been registered for sale with the US Securities and Exchange Commission — an “unprecedented” amount of unregistered securities, the regulator said in announcing the penalty on Thursday.
The SEC alleged that the violations stemmed from the bank’s failure to implement internal controls to monitor the sales in real time. “This case highlights why it is essential for firms like Barclays to have robust internal controls over their offers and sales of securities,” Gurbir Grewal, director of the SEC’s enforcement division, said in a statement.
As a result of the action, the bank in 2017 lost a licence that enabled it to automatically update the amount of structured products, which are pre-packed investment strategies based on derivatives, that it intended to sell. In 2019, Barclays set its maximum at $20.8bn, but in March discovered it had vastly exceeded that amount.
Without the licence, the bank’s staff understood that they would have had to set up a system to track sales of securities relative to offerings that had been registered with the regulator, according to the SEC. The regulator, however, said that no such mechanism was put in place.
Thursday’s SEC action comes in the same week that the SEC and the Commodity Futures Trading Commission fined Barclays $200mn over widespread lapses in record-keeping practices, part of a $1.8bn raft of penalties against 11 banks and brokers.
This story originally appeared on: Financial Times - Author:Stefania Palma
