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Barclays "Staggering" Oversight Deficiencies Cost it $360 Million: SEC

Greg Morcroft

Published: October 3, 2022 4:20 am

Last Updated: October 3, 2022 12:59 pm

The Securities and Exchange Commission last week charged Barclays PLC (GB:BARC, US:BCS) and Barclays Bank PLC (BBPLC) with offering and selling unregistered securities and failing to implement any internal control to track such transactions in real time.

Both firms restated their year-end 2021 audited financial statements filed with the Commission to reflect the error and agreed to pay a $200 million civil penalty.

The SEC also ordered Barclays Bank Plc disgorgement and prejudgment interest of more than $161 million.

The SEC news release said, “the Commission settled an action against a BBPLC affiliate in May 2017, BBPLC lost its status as a well-known seasoned issuer (WKSI). As a result, BBPLC had to quantify the total number of securities it anticipated offering and selling and pay registration fees for those offerings upon filing a new registration statement. 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.”

Due to the failure to monitor, BBPLC offered and sold roughly $17.7 billion of securities in unregistered transactions. The SEC noted that BBPLC self-reported its over-issuances to regulators, provided meaningful cooperation during the SEC staff’s investigation, and subsequently commenced a rescission offer.

“While we acknowledge Barclays’ efforts to identify, disclose and remediate this conduct, the control deficiencies and the scope of the conduct at issue here were simply staggering. It is now time for other firms employing similar shelf registrations to take notice and improve their internal compliance and control functions.”

The SEC’s order concluded that BBPLC violated the Securities Act of 1933 and that both firms violated the Securities Exchange Act of 1934. Without admitting or denying the SEC’s findings, both firms agreed to cease and desist from violating the charged provisions.

This article originally appeared on Fintel