The U.K. Financial Conduct Authority (FCA) provisionally notified Barclays it intends to fine the bank 50 million pounds (U.S. $56 million) for failing to properly disclose financial arrangements made with Qatari investors in 2008.
The FCA said Friday in a press release the fine is provisional because it hinges on a decision by the Upper Tribunal, which will rule on whether the regulator’s proposed penalty should be upheld.
The FCA said Barclays raised capital funds in June and October 2008, during the worldwide financial crisis, in a manner that was “reckless and lacked integrity.” Barclays entered into two advisory agreements with Qatari entities that involved payments of £322 million (U.S. $363 million) over three and five years, respectively, part of a plan to raise up to £11.8 billion (U.S. $13.3 billion) in funds, according to the regulator’s decision notice.
“These payments were calculated specifically by reference to the Qataris’ financial demands for investing in the capital raisings, not the value of the advisory services that Barclays expected to receive under the agreements,” the FCA said.
Barclays disclosed the June agreement but not the October agreement, the FCA said, “and did not disclose the payments under the capital raisings or their connection to the Qatari entities’ participation in the capital raisings.” There were also fees paid to one of the Qatari entities that were not disclosed, according to the decision notice.
The disclosure of the payments “would have had a material impact on the terms of the capital raisings as disclosed,” the FCA said, and “would have been highly relevant information to shareholders, investors, and the wider market.”
Barclays “failed to take reasonable care to ensure that the information contained in the announcements and prospectuses associated with the capital raisings that it published was not misleading, false, or deceptive and did not omit anything likely to affect its import,” the decision notice said.
“There was no legitimate reason or excuse for failing to disclose these matters, certainly no basis for doing so because of the financial crisis,” said Mark Steward, the FCA’s executive director of enforcement and market oversight, in the press release. “Due transparency is always critical to financial markets, especially in times of market or financial stress.”
The FCA issued warning notices to Barclays in 2013, but the case was paused so the Serious Fraud Office could resolve criminal proceedings against Barclays and several of its executives. Related charges against the bank and its executives were dismissed by U.K. courts in 2018 and 2020, respectively.
Barclays did not respond to a request for comment.