Barclays Fined for 'Serious Weakness' in Control System

Britain's financial watchdog fined Barclays 2.45 million pounds ($4 million) on Tuesday for failing to provide accurate transaction reports and "serious weaknesses" in control systems in two of its divisons.

The Financial Services Authority levied the penalty on Barclays Capital Securities and Barclays Bank.

Financial institutions are required to submit transactions data by close of business the day after a trade is executed. The FSA uses this to detect and investigate suspected market abuse like insider trading and market manipulation.

The FSA said it discovered discrepancies in Barclays' data while reviewing a suspected incident of market abuse by a third party.

Sang Tan

A subsequent review of Barclays' transaction reporting arrangements revealed that it did not have adequate systems and controls to meet the transaction reporting requirements. It also found a substantial number of errors in the data submitted to the FSA.

Alexander Justham, the FSA's director of markets, said the penalty imposed on Barclays is significantly higher than previous penalties imposed for transaction reporting errors.

"This reflects the serious nature of Barclays' breaches and is a warning to other firms that the FSA will not tolerate inadequate systems and controls," Justham said. "Barclays' reporting failures could have a damaging impact on our ability to detect and investigate suspected market abuse."


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