A Barclays unit agreed to pay $700,000 to settle allegations levied by the Financial Industry Regulatory Authority (FINRA) that its research analysts violated conflict-of-interest rules and the firm failed to sufficiently supervise their trades.
Barclays Capital agreed to be censured and pay the fine in reaching settlement, according to a FINRA order issued Friday.
Barclays failed to identify and disclose 99 instances of its research analysts holding stock in a company in which they published a report and three instances of research analysts trading in their brokerage accounts in a manner inconsistent with published recommendations, FINRA alleged.
The details: From January 2016 to August 2019, the firm did not establish or maintain a supervisory system to detect such violations of FINRA’s conflict-of-interest rules, per the order.
The firm’s written supervisory procedures “did not include a process for the review of securities transactions in equity research analysts’ external managed accounts reasonably designed to identify potential violations of securities laws, including potential market manipulation and insider trading,” the order stated.
From at least April 2021 through March 2022, the firm failed to obtain client data to “determine whether it needed to disclose specified conflicts of interest in its research reports,” per the order. As a result, the firm failed to disclose at least 803 reports covering 22 issuers that an affiliate “received non-investment banking related compensation from the issuer within the prior 12 months,” the order stated.
FINRA noted it fined Barclays twice before, in 2016 ($500,000) and 2014 ($5 million), for conflict of interest related to research analysts and for failing to implement written supervisory procedures to ensure compliance with FINRA rules.
A Barclays spokesperson declined to comment. The firm agreed to settle without admitting or denying FINRA’s findings.
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