Barclays Capital Fined $1 Million for Net Capital Rules Violations
By Staff
Global financial services provider Barclays Capital Inc. has been censured and fined $1 million by the Financial Industry Regulatory Authority (FINRA) for violations of rules relating to net capital.
According to FINRA, between at least January 2020 and April 2021, Barclays filed 16 Financial and Operational Combined Uniform Single, or FOCUS, Reports with inaccurate capital figures.
FINRA stated that Barclays misclassified certain firm commitment offerings as best-efforts offerings, which resulted in the firm’s net capital being overstated by amounts ranging from approximately $44 million to $949 million. FINRA did say that although Barclays incorrectly calculated its net capital, the firm maintained sufficient excess net capital to engage in a securities business and participate in the firm commitment offerings for which it served as an underwriter during the relevant period.
A firm commitment offering is an underwriting agreement in which the underwriter agrees to purchase all of the securities being offered by the issuer, even if they are not able to sell them all to investors. This type of offering is considered to be riskier for the underwriter than a best-efforts offering, in which the underwriter only agrees to sell as many securities as possible.
These oversights by Barclays caused the company to violate FINRA 3110 requires member firms to establish and maintain a supervisory system that is reasonably designed to ensure compliance with applicable securities laws and regulations. A violation of Rule 3110 is also a violation of Rule 2010, which requires member firms to observe high standards of commercial honor and just and equitable principles of trade.
As with most large financial firms, this is not Barclays’ first encounter with FINRA. As previously reported by The DI Wire, the firm was fined $2.5 million in 2023 for inaccurately reporting over-the-counter options positions.
Barclays Capital is headquartered in New York and has 15 branches with approximately 2,850 registered representatives. Barclays conducts a general securities business.
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