LONDON -- British regulators fined Barclays investment bank about $61.6 million for failing to properly segregate billions of dollars in client assets, potentially putting them at risk if the bank were ever to become insolvent.
It is the highest fine ever imposed by the Financial Conduct Authority, or its predecessor agency, for such a breach.
The agency said the activity represented "significant weaknesses" in the systems and controls at Barclays' investment bank from November 2007 to January 2012 -- namely that it failed to identify in its records which entity in the investment bank was responsible for which account or to whom those accounts belonged.
The misconduct involved almost $30 billion of assets held by Barclays clients in 95 custodial accounts in 21 countries, the agency said.
"Barclays failed to apply the lessons from our previous enforcement actions, numerous industry-wide warnings, and exposed its clients to unnecessary risk," Tracey McDermott, the agency's director of enforcement and financial crime, said in a statement. "All firms should be clear after Lehman that there is no excuse for failing to safeguard client assets."
Following the collapse of Lehman Brothers in the financial crisis, the Financial Conduct Authority's predecessor agency notified compliance officers and chief executives of the various financial institutions they regulate about its concerns regarding the management of client money and client assets.
Barclays, which self-reported the issue, said that it did not profit from the conduct and no customers lost money as a result. The issue was isolated to the investment bank and did not impact retail customers, the company said.
"Barclays has subsequently enhanced its systems to resolve these issues and to ensure we have the requisite processes in place," a Barclays spokesman said. "No client has suffered any loss as a consequence of this weakness in our processes, which existed prior to January 2012."
By agreeing to settle at an early stage of the investigation, Barclays qualified for a 30 percent reduction in the fine, which could have topped $88.3 million, the agency said.
Business on 09/24/2014