The investment bank arm of Barclays agreed to pay a $2.8 million fine as part of a settlement announced by the Financial Industry Regulatory Authority (FINRA) on Wednesday for “failure to comply with customer confirmation and related supervision rules” that led to disclosure lapses.
From November 2008 through the present, Barclays Capital sent customers approximately 270 million confirmations that “inaccurately disclosed the firm’s execution capacity, the customer’s price, the market center of execution, or whether the trade was executed at an average price,” according to a consent letter.
The alleged lapses were caused by 11 underlying issues that each went undetected for at least five years, FINRA stated, including “technology issues, a drafting error, and a misunderstanding of regulatory guidance.”
“Barclays had no supervisory system to review the accuracy of its confirmations from at least November 2008 through March 2020 and an unreasonable supervisory system in this respect from April 2020 through the present,” the self-regulatory organization continued.
Due to the alleged deficiencies, Barclays failed to properly monitor a third-party vendor responsible for required financial disclosures, FINRA said. From at least April 2014 through August 2020, “Barclays’ procedures did not require, nor did the firm otherwise conduct, a supervisory review of whether the vendor calculated its statistics in compliance” with FINRA’s Rule 605, which requires the disclosure of “certain execution quality statistics and must be categorized by security, order size, and order type.”
Without admitting or denying the findings, Barclays agreed to a censure and to pay the fine. The firm is required within 120 days to correct the “ongoing” confirmation issue and implement “a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance” with FINRA regulations.
Barclays did not respond to a request for comment.