Barclays Capital to pay $1.25M fine for failing to fingerprint associated persons
Barclays Capital Inc. has agreed to pay a fine of $1,250,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
Barclays Capital Inc. has agreed to pay a fine of $1,250,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
Federal securities laws require that FINRA member firms fingerprint most associated persons prior to or upon association with a firm. Firms review the fingerprint results as part of their background check to determine, among other things, whether a prospective associated person has previously engaged in misconduct that subjects that person to a statutory disqualification. As set forth in Section 3(a)(39) of the Securities Exchange Act of 1934, certain criminal and regulatory events will subject a person to a statutory disqualification.
Section 17(f)(2) of the Exchange Act and Exchange Act Rule 17f-2 require all partners, directors, officers, and employees of broker-dealers, unless they are exempt, to be fingerprinted. As explained in Notice to Members 05-39, members are responsible for obtaining a prospective employee’s fingerprints and certain required identifying information, so that the firm can determine whether the prospective employee is subject to statutory disqualification.
A violation of Exchange Act § 17(f)(2) and Exchange Rule 17f-2 is also a violation of FINRA Rule 2010, which requires member firms to observe high standards of commercial honor and just and equitable principles of trade in the conduct of their business.
From at least January 2013 to the present, Barclays has failed to timely fingerprint and screen for statutory disqualification 2,317 non-registered associated persons based in foreign locations. Barclays is unable to determine how many former non-registered associated persons based in foreign locations should have been fingerprinted and whether any of those individuals were subject to statutory disqualification, because they are no longer associated with the firm.
Between January 2013 and September 2023, Barclays also failed to timely fingerprint 1,663 U.S.-based non-registered associated persons. Barclays was unable to fingerprint 1,414 of those individuals because they were no longer associated with the firm. Barclays was further unable to determine whether any of those formerly associated individuals were subject to statutory disqualification.
The firm voluntarily commenced remediation efforts prior to FINRA’s investigation. As part of its ongoing remedial efforts, Barclays has fingerprinted 1,797 non-registered associated persons (1,646 foreign-based and 151 U.S.-based) who are currently associated with the firm.
By failing to timely fingerprint non-registered associated persons, Barclays violated § 17(f)(2) of the Exchange Act, Exchange Act Rule 17f-2, and FINRA Rule 2010.
Since at least January 2013, Barclays has failed to make and keep current required fingerprint records for 3,980 non-registered associated persons that it failed to fingerprint. Between 2004 and 2016, Barclays fingerprinted 534 non-registered associated persons, but failed to maintain those fingerprint records, as required.
Therefore, Barclays violated § 17(a) of the Exchange Act, Exchange Act Rule 17a- 3(a)(13), and FINRA Rules 4511 and 2010.
From January 2013 to the present, Barclays has failed to establish, maintain, and enforce a supervisory system and written procedures reasonably designed to achieve compliance with the Exchange Act and FINRA rules discussed above regarding required fingerprinting and screening for statutory disqualification of non-registered associated persons.
The firm’s WSPs failed to require individuals based in foreign locations who become associated with the firm in a non-registered capacity to be fingerprinted and screened for statutory disqualification. The firm’s WSPs lacked any procedures to determine whether any employees are exempt from the fingerprinting requirements. Additionally, Barclays failed to establish, maintain, and enforce a supervisory system, including WSPs, reasonably designed to achieve compliance with fingerprinting requirements of U.S.- based employees.
Therefore, Barclays violated FINRA Rules 3110 and 2010 and NASD Rule 3010.
On top of the fine, the firm has agreed to a censure.
Maria Nikolova
Maria has been engaged in journalism for more than 17 years, providing Forex industry coverage for the past 10 years. Before joining FNG she was Managing Editor at FinanceFeeds. Prior to that, she worked at LeapRate. Maria has a Philosophy degree from the St. Kliment Ochridski university in Sofia. She has specialized in Cognitive Science in Vienna. Her interests include psychology, AI, and linguistics.Related Posts
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