The SEC stresses the importance of having ‘robust internal controls over their offers and sales of securities.’
Those were the words that regulators at the Securities and Exchange Commission used when announcing a $361 million settlement with Barclays to resolve charges the financial services giant offered and sold about $17.7 billion of securities in unregistered transactions.
The UK-based bank declined to comment and there was no finding of intentional misconduct by the company or its employees.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said in a statement that the 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,” he said. “The time for other firms employing similar shelf registrations to take notice and improve their internal compliance and control functions is now.”
The bank offered $17.7 billion worth of financial products that had not been registered for sale with the SEC, regulators said.
Officials said the offering was the result of “a failure to implement any internal control to track such transactions in real time.”
‘No Internal Control’
The SEC said Barclays lost its status as a well-known seasoned issuer (WKSI) following an action by regulators against an affiliate.
“As a result, BBPLC 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,” the SEC said.
“The SEC’s order notes that, given this requirement, BBPLC personnel understood that the firm needed to track actual offers and sales of securities against the amount of registered offers and sales on a real-time basis; yet, no internal control was established for this purpose.”
Barclays agreed to pay a $200 million civil penalty and the SEC ordered $161 million for disgorgement and prejudgment interest of, which was deemed satisfied by an offer of rescission Barclays made to investors in the unregistered offerings.
The announcement comes in the same week the SEC and the Commodity Futures Trading Commission fined Barclays $200 million for failing to meet record keeping requirements.
A total of 11 banks and brokerages were fined more than $1.8 billion.
The regulators said the companies failed to stop its employees, including those at senior levels, from communicating both internally and externally using unapproved communication methods, including messages sent via personal text, WhatsApp, or Signal.