FINRA fines Barclays $2.8M for non-compliance with customer confirmation, supervision rules
Barclays Capital Inc has agreed to pay a fine of $2.8 million as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
The matter involves Barclays’ failure to comply with customer confirmation and related supervision rules. From November 2008 through the present, Barclays sent its 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.
Barclays’ failures were caused by 11 underlying issues, each of which went undetected for at least five years. They included technology issues, a drafting error, and a misunderstanding of regulatory guidance.
As a result, Barclays violated (1) Exchange Act Section 10(b), Exchange Act Rule 10b-10, NASD Rules 2230 and 2110, and FINRA Rules 2232 and 2010 with respect to an estimated 245.4 million confirmations; and (2) Exchange Act Section 17(a), Exchange Act Rule 17a-3(a)(8), NASD Rule 3110, and FINRA Rules 4511 and 2010 with respect to an estimated 24.8 million confirmation records.
Throughout this time, Barclays failed to establish and maintain a supervisory system, including written procedures, reasonably designed to achieve compliance with confirmation requirements. Among other things, 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.
This failure persisted even though, by mid-2017, Barclays was aware due to FINRA examinations of multiple systemic issues resulting in tens of millions of inaccurate confirmations.
Barclays also failed to establish and maintain a supervisory system, including written procedures, reasonably designed to achieve compliance with Rule 605 of Regulation NMS from at least April 2014 through August 2020. As a result of its supervisory failures, Barclays violated NASD Rules 3010 and 2110 and FINRA Rules 3110 and 2010.
On top of the fine, Barclays has agreed to a censure, as well as to an undertaking that, within 120 days, a senior officer and registered principal of Barclays shall certify in writing to FINRA that Barclays has (1) corrected the ongoing confirmation issue described above; and (2) implemented a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with Exchange Act Rule 10b-10 and FINRA Rule 2232.