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Barclays hit with $361M US penalty for ‘staggering’ blunders



(Reuters) – British lender Barclays agreed to a $361 million penalty with U.S. regulators on Thursday for “staggering” failures that led it to oversell $17.7 billion of structured products, adding further costs to a mistake that has blighted CEO CS Venkatakrishnan’s first year in charge. .

Barclays shares rose 2% in early trade on Friday following the news and were last up 0.5% at 08:46 GMT – broadly in line with gains from the broader FTSE 100.

The behavior in question dates back to March this year when Barclays revealed that it had mistakenly oversold complex structured and exchange-traded notes, exceeding by around 75% a $20.8 billion limit on such sales that it had agreed with the Securities and Exchange Commission.

The bank had failed to implement any internal controls to track such transactions in real time, the SEC found.

“While we acknowledge Barclays̵

7; efforts to identify, expose and remedy this conduct, the control deficiencies and the scale of the conduct at issue here were simply staggering,” Gurbir Grewal, director of the SEC’s Division of Enforcement, said in a statement.

Barclays was not immediately available for comment on Friday. A spokesperson for Barclays, which did not acknowledge or deny the SEC’s findings, declined to comment Thursday.

Buyers of the notes, considered “unregistered securities”, had the right to demand that Barclays buy back the products at the original price plus interest. The bank took a £1.3 billion charge in the second quarter to cover the cost of buying back the securities, which reduced profits.

On Thursday, the SEC said Barclays had also agreed to pay a $200 million civil penalty for the control lapses. In addition, it agreed to pay principal and interest of more than $161 million, although the regulator said additional charges were met by the buyback offer.

While the SEC settlement helps draw a line under the incident, which has been an embarrassment for Venkatakrishnan — known at the bank as “Venkat” — it still faces private litigation related to the incident.

Barclays must also account for the final costs of its so-called withdrawal offer to buy back the securities it mistakenly sold. ‘Venkat’ told an investor event this month that it would do so in a “relatively short period of time.”

Barclays said this month that investors had filed claims for $7 billion of the $17.7 billion worth of securities it oversold.


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