Cases involving enforcement action by US and UK authorities are settled regularly, and we often consider these settlements as setting precedents. Companies are advised to take appropriate measures in light of this. Every month we provide a brief overview of relevant settlements. This month we briefly discuss the Barclays settlements in the US and UK. Barclays was fined twice in one day for systematic compliance failures in the US and the UK. These settlements underline once again the importance of having strong compliance systems in place.
The Securities and Exchange Commission charged Barclays Capital Inc. on 23 September 2014 with failing to maintain an adequate internal compliance system after its acquisition of the Lehman Brothers advisory business in September 2008. According to the SEC order, Barclays did not adopt and implement written policies and procedures and maintain certain mandatory books and records. These deficiencies in Barclays’ compliance system led to other securities law violations.
Barclays agreed to settle the SEC case by paying USD 15 million and promising to engage an independent compliance consultant to conduct an internal review.
The Financial Conduct Authority in the UK fined Barclays GBP 38 million (USD 62 million), asserting that Barclays put GBP 16.5 billion (USD 27 billion) of client assets at risk. This fine was the highest fine ever imposed by the FCA for client asset breaches. According to the FCA order, there were significant weaknesses in the systems and controls at Barclays’ banking division between November 2007 and January 2012.
Barclays had already agreed to a settlement with the UK authorities at an early stage in the investigation. This resulted in a 30% discount under executive settlement procedures. Without this settlement, according to the FCA, the FCA would have imposed a penalty of more than GBP 85 million.