Barclays has agreed to pay $361m to settle a probe by the Securities and Exchange Commission into a “staggering” trading error, the US regulator confirmed.
The SEC said it had charged the British bank in connection with the unregistered offer and sale of an “unprecedented” amount of securities, which had happened “due to a failure to implement any internal control to track such transactions in real time”.
In March, it emerged that Barclays had sold $17.7bn worth of structured financial products that it was not permitted to trade. It said it would cost £450m to compensate investors for the error, while second-quarter profits fell 48% year-on-year after it took a £1.3bn charge relating to the over-issuance of securities, including £165m to cover any SEC penalty.
Gurbir Grewal, director of the SEC’s division of enforcement, said: “This case highlights why it is essential for firms like Barclays to have robust internal controls over their offers and sales of securities.
“While we acknowledge Barclays’ efforts to identify, disclose and remediate this conduct, the control deficiencies and the scope of the conduct at issue here was simply staggering.”
Sheldon Pollock, associate regional director at the SEC’s New York regional office, added: “All issuers should maintain robust internal controls to prevent offering and selling securities in unregistered transactions.”
The SEC said Barclays – which has not admitted or denied its findings – had agreed to pay a $200m civil penalty alongside disgorgement and prejudgement interest of more than $161m. It also agreed to cease and desist with violating the charged provisions.
Barclays has yet to comment on the SEC’s order.
Victoria Scholar, head of investment at Interactive Investor, said: “This was the latest in a string of blunders for the bank. Chief executive CS Venkatakrishnan was brought in eleven months ago to create a fresh start for the embattled lender, after former chief executive Jes Staley departed following revelations of its his ties to sex offender Jeffrey Epstein.
“On top of the trading blunder, the lender has struggled with a sharp slump in deal making that has weighed on its investment bank and a drop inequity trading amid the stock market weakness. This week’s turmoil in UK gilt markets is likely to create another headwind for Barclays in its third quarter results, due in October.”
