Barclays Capital Inc has agreed to pay a fine of $325,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).

At all relevant times, the firm’s written supervisory procedures (WSPs) required associated persons to disclose and receive approval to maintain a brokerage account outside of the firm. The firm supervised trading in such accounts and required pre-approval of trading in certain investment products to mitigate against conflicts of interest and trading in material non-public information.

Approximately 93% of employee outside accounts were held at member firms from which the firm received electronic feeds of account statements that were subject to an automated review process. The firm used a manual review process for the remaining 7% of outside accounts that did not use an electronic data feed, requiring either the employee or the other member firm to mail paper statements to a Barclays office.

Beginning in March 2020, Barclays’ offices were closed to employees for an extended period due to the COVID-19 pandemic. Resulting delays and organizational changes created a substantial backlog in unreviewed or missing account statements that the firm failed to timely address.

From July 2021 through June 2022, the firm failed to either collect or timely review approximately 8,200 account statements from approximately 700 employee-held outside brokerage accounts, or approximately half of all outside accounts for which the firm did not receive an electronic data feed.

During this period, the firm’s employees executed 161 trades in these outside accounts without first obtaining pre-clearance of the trades. These trades were not timely identified as a result of the backlog of unreviewed and missing account statements.

In June 2022, the firm modified its review system for manually-reviewed outside account statements by establishing an electronic feed for a significant percentage of these outside accounts and a system for employees to upload statements for accounts without an electronic feed. The firm also commenced an effort to complete its remedial review of the backlog of unreviewed and missing account statements, which it has completed.

By failing to establish and maintain a reasonable supervisory system and procedures for the supervision of employee outside brokerage accounts, Barclays violated FINRA Rules 3110 and 2010.

On top of the $325,000 fine, Barclays Capital has agreed to a censure.