SEC Charges Barclays $15 Million for Compliance Failures
The Securities and Exchange Commission (SEC) recently imposed a $15 million fine on Barclays Capital Inc. to settle charges that it failed to ensure proper compliance with its own rules and securities laws following Barclays’ acquisition of Lehman Brothers’ advisory division in 2008.
The Lehman purchase resulted in the creation of Barclays Wealth and Investment Management Americas. As of March 2014, the firm had about 260 financial advisers and $13 billion in assets under management.
In a release announcing the charges, the SEC said that Barclays failed to oversee the growth of its advisory unit following the merger. Barclays Capital previously operated primarily as a broker-dealer.
The SEC claims that Barclays:
- Failed to build a compliance infrastructure that was reasonably designed to prevent violations of the Advisers Act and its rules,
- Failed to make required written disclosures or obtain client consent in more than 1,500 transactions,
- Charged fees and commissions that were inconsistent with its disclosures in almost 3,000 other accounts, and
- Underreported assets under management to regulators by $754 million in March 2011.
Who were the winners and losers in the violations? Barclays pocketed about $3.1 million in additional revenue, while overcharges and client losses stacked up to $472,000.
The firm reimbursed or credited affected clients to the tune of about $3.8 million, including interest. Barclays also agreed to take remedial measures, hire an independent compliance consultant to conduct an internal review, and send a letter within 30 days to all clients, notifying them of the entry of this order.
Source: Investment News