The Financial Industry Regulatory Authority said it is fining Barclays Capital Inc. (ADR) $3.75 million for systemic failures that prevented it from making sure certain instant messages, emails, and electronic records are preserved in the way they are required be for at least a decade. The financial institution is settling without denying or admitting to the findings. It has, however, agreed to an entry of the SRO’s findings.
According to FINRA, between 2002 and 2012, Barclays did not preserve a lot of records and electronic books in WORM format, per regulator mandate. This included trade confirmations, trade information, order and trade ticket data, blotters, accounting records, and other records. WORM (Write-Once, Read-Many) Format is the non-erasable, non-rewriteable format that business-related electronic records are supposed to be kept in-per FINRA rules and federal securities laws. The Securities and Exchange Commission says that this format and the preservation of records are essential in protecting investors and ensuring that compliance with securities laws is taking place.
In regards to Barclays over this matter, FINRA says that the issues were widespread and affected all of the firm’s business. It said that because of this, Barclays couldn’t determine whether all of its e-books and records were kept in an a manner that was unalterable. Also, Barclays is accused of not properly keeping certain attachments to Bloomberg emails and not properly keeping about 3.3 million Bloomberg instant messages. Also, Barclays purportedly did not set up and maintain a proper system and written procedures so it could comply with FINRA, SEC, and NASD regulations and rules involving the requirements noted in the violations.
This is not the first time that FINRA has imposed a fine against a financial firm over electronic document and communication retention. Last year, the SRO fined LPL Financial Inc. (LPLA) $7.5 million over nearly three dozen systemic failures that took place over six years. LPL put aside another $1.5 million to compensate customers that may have been affected. The independent broker-dealer was accused of not fulfilling its duty to properly supervise its representatives, as well as of failing to oversee 28 million emails that involved thousands of its independent contractor representatives.
Two others that have been fined by FINRA over email-related violations are NEXT Financial Group (for failure to supervise email communications and make sure that e-mails transmitted between its customers on non-firm email accounts would always be captured, maintained, and reviewed on the company’s server) for $250,000 and Piper Jaffray for $700,000 in 2010, also over email retention, preservation, and retrieval issues.
A firm that neglects to properly maintain its records can find it difficult to identify investment adviser fraud, broker fraud, and other misconduct. And often, it is the customers who end up losing. Contact our securities fraud law firm today to request your free case assessment.
FINRA Fines Barclays $3.75 Million for Systemic Record and Email Retention Failures, FINRA, December 26, 2013
More Blog Posts:
FINRA Fines Piper Jaffray $700,000 for E-mail Retention Issues and Other Violations, Stockbroker Fraud Blog, June 7, 2010
FINRA Orders LPL Financial to Pay $7.5M Over Allegedly Inadequate Supervision of E-Mails, Stockbroker Fraud Blog, May 23, 2013
Barclays LIBOR Manipulation Scam Places Citigroup, Credit Suisse, Deutsche Bank, JP Morgan Chase, and UBS Under The Investigation Microscope, Institutional Investor Securities Blog, July 16, 2012