Barclays Pays $15 million To Settle SEC Charges

WASHINGTON - The Securities and Exchange Commission has charged Barclays Capital Inc. with failing to maintain an adequate internal compliance system after it acquired the advisory business of Lehman Brothers in September 2008.

Barclays failed to adopt and implement written policies and procedures and maintain certain required books and records to prevent violations of federal securities laws, according to the settlement between SEC and the firm. Barclay's agreed to pay a $15 million penalty and to take remedial actions to settle the allegations of various violations of the Investment Advisers Act of 1940.

Without admitting or denying the findings, the firm also agreed to be censured and to cease and desist from committing or causing any further such violations.

"When a firm acquires an advisory business, it must devote the attention and resources necessary to build a robust compliance system," said Julie Riewe, co-chief of the SEC Enforcement Division's asset management unit. "Barclays failed to establish this critical compliance foundation when it acquired Lehman's advisory business, and as a result subjected its clients to a host of improper practices and inadequate disclosures."

The IAA's provisions require firms both to have policies and procedures in place designed to prevent violations and to make various disclosures to customers in interactions.

The firm had policies and procedures in place, the SEC found, but they suffered from "deficiencies and weaknesses" and were not reasonably designed to prevent the violations that occurred. According to the settlement order, Barclays, after acquiring Lehman, executed more than 1,500 principal transactions with its advisory client accounts without making the required written disclosures or obtaining client consent. SEC investigators found that Barclays charged 2,785 advisory client accounts commissions and fees, and earned revenues, that were inconsistent with its disclosure to clients.

The firm also underreported its assets under management on its March 31, 2011 filing by $754 million. The firm's violations resulted in overcharges and client losses of about $472,000, and additional revenue to Barclays of more than $3.1 million, the SEC said. The firm has made repayment to the affected clients.

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