British bank Barclays was hit with a combined $77 million in fines from British and US regulators on Tuesday as the lender continues to be dogged by problems from its past. Barclays was fined 38 million pounds ($62 million) by Britain's Financial Conduct Authority (FCA) for exposing customers to unnecessary risks by failing to ensure that client assets were properly safeguarded and adequate records kept.
Hours later it was hit with a $15 million fine from the US Securities and Exchange Commission (SEC) for lax internal compliance processes after its take-over of the US operations of Lehman Brothers in September 2008. The SEC said Barclays will be required to undertake certain remedial steps, including the hiring of an independent compliance consultant.
It US regulator said that Barclays failed to enhance its compliance programme when it bought Lehman's advisory business after the US bank's collapse. The shortcomings, the SEC said, led Barclays to commit a variety of other violations of federal laws governing investment advisers.
It said the violations resulted in overcharging and client losses of approximately $472,000 and additional revenue to Barclays of more than $3.1 million. The bank has since reimbursed or credited affected clients about $3.8 million, the SEC said. Barclays is trying to improve standards and its corporate culture after being rocked by a series of scandals - including the mis-selling of loan insurance and the attempted manipulation of Libor interest rates - which raised concern about lax standards.
Earlier on Tuesday the FCA imposed its highest fine for client asset breaches and said there were "significant weaknesses" in Barclays' systems and controls between November 2007 and January 2012 that put 16.5 billion pounds of client's assets at risk. The FCA, which has tightened rules governing client asset protection since the collapse of Lehman Brothers in 2008, said that customers risked incurring extra costs, lengthy delays or losing their assets if the bank had become insolvent. "Barclays failed to apply the lessons from our previous enforcement actions, numerous industry-wide warnings and exposed its clients to unnecessary risk," said Tracey McDermott, the head of enforcement and financial crime at the FCA.
"All firms should be clear after Lehman that there is no excuse for failing to safeguard client assets." Barclays, which said it did not profit from these failings and that no customer had lost money, qualified for a 30 percent fine reduction because it co-operated with the FCA. This reduced the penalty from an original 54 million pounds. "Barclays identified and self-reported to the FCA the issues giving rise to the FCA's findings and we accept their conclusion," the bank said in an emailed statement. "Barclays has subsequently enhanced its systems to resolve these issues and to ensure we have the requisite processes in place." Barclays said the SEC's action related to activity between 2009 and 2011 and it had since strengthened its supervisory and control environment.
Comments
Comments are closed.