The US Securities and Exchange Commission (SEC) has charged Barclays Bank PLC and Barclays PLC for the unauthorised sale of securities.
The firms have agreed to pay $200 million in civil penalties, and BBPLC was charged an additional $161 million in disgorgement and prejudgment interest by the SEC due to the BBPLC rescinding the offers made to investors in the unregistered issuances.
The SEC recognises that BBPLC self-reported their over-issuances and cooperated with the investigation.
Gurbir S. Grewal, director of the SEC’s division of enforcement, stated: “This 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. The time for other firms employing similar shelf registrations to take notice and improve their internal compliance and control functions is now.”
The SEC reported that BBPLC offered and sold around $17.7 billion of unregistered securities. As BBPLC is no longer a well-known seasoned issuer (WKSI) as of May 2017, the firm is required to report its anticipated number of securities and offerings to the SEC and pay registration fees when filing a new registration statement. The firm is required to track their transactions in real time, but not internal personnel were directed for this purpose.
Sheldon L. Pollock, associate regional director of the SEC’s New York regional office, added: “All issuers should maintain robust internal controls to prevent offering and selling securities in unregistered transactions. We encourage any firms that have lost WKSI status to ensure the stability of their internal controls and to self-report any over-issuances, should any be found.”
Earlier this week, the SEC charged 16 of Wall Street’s largest financial institutions $1.1 billion for unauthorised employee messaging.