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FINRA Hits Barclays for “Systemic Failures”

Barclays is in trouble with the US regulatory authorities again as FINRA – the Financial Institutions Regulatory Authority – has announced it has fined the bank $3.75 million for “systemic failures to preserve electronic records and certain emails and instant messages in the manner required for a period of at least 10 years.

Whilst Barclays neither admitted nor denied the charges in settling the case, FINRA says it found that from at least 2002 to 2012, the bank failed to preserve many of its required electronic books and records – including order and trade ticket data, trade confirmations, blotters, account records and other similar records – in WORM (write once – read many) format.

It adds the issues were “widespread” and included all of the firm's business areas, thus, Barclays was unable to determine whether all of its electronic books and records were maintained in an unaltered condition.

Brad Bennett, executive vice president and chief of enforcement at FINRA, says, “Ensuring the integrity, accuracy and accessibility of electronic books and records is essential to a firm's ability to meet its compliance obligations. The format errors in this case made it nearly impossible for Barclays to verify that these key materials remained in an unaltered condition.”

FINRA also found that from May 2007 to May 2010, Barclays failed to properly retain certain attachments to Bloomberg emails, and additionally failed to properly retain approximately 3.3 million Bloomberg instant messages from October 2008 to May 2010.

In addition to violating FINRA, SEC and NASD rules and regulations, this adversely impacted Barclay's ability to respond to requests for electronic communications in regulatory and civil matters. Bloomberg messages are at the centre of the current investigation into alleged manipulation of FX markets around the 4PM London Fix and played a similar role in the Libor investigations.

FINRA also says Barclays failed to establish and maintain an adequate system and written procedures reasonably designed to achieve compliance with SEC, NASD, and FINRA rules and regulations, as well as to timely detect and remedy deficiencies related to those requirements.

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