The Securities and Exchange Commission (SEC) has charged Barclays bank in connection with failing to satisfy an “unprecedented amount of securities”.
The SEC claims that the fine comes due to insufficient internal controls to track suspicious transactions in real time. Following the penalty, Barclays has restated their year-end 2021 audited financial statements filed with the Commission.
The bank agreed to pay a $200m civil penalty and the SEC additionally ordered Barclays to pay disgorgement and prejudgment interest of more than $161m, which was deemed satisfied by an offer of rescission Barclays made to investors in the unregistered offerings.
The SEC’s order states that, following a settled commission action against a Barclays affiliate in May 2017, the bank lost its status as a well-known seasoned issuer. As a result, Barclays had to quantify the total number of securities that it anticipated offering and selling and pay registration fees for those offerings upon the filing of a new registration statement.
Given this requirement, the notes detailed that Barclays personnel understood the firm’s need to track actual offers and sales of securities against the amount of registered offers and sales on a real-time basis, but no internal control was established.
According to the SEC’s order, as a result of this failure, Barclays offered and sold approximately $17.7bn of securities in unregistered transactions. Barclays self-reported its over-issuances to regulators, provided cooperation during the SEC staff’s investigation, and subsequently commenced a rescission offer.
“This case highlights why it is essential for firms like Barclays to have robust internal controls over their offers and sales of securities,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.
“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. The time for other firms employing similar shelf registrations to take notice and improve their internal compliance and control functions is now.”
