Barclays Capital Inc had agreed to dock out $125,000 in fines as part of a settlement agreement with the US regulator, the Financial Industry Regulatory Authority (FINRA). This fine was given in regards to failure from Barclays when it comes to reporting short interest positions within select foreign-listed securities.
Reporting Almost Twice The Amount Of Shares
During the Review Period, between the 30th of April, 2013 to the 30th of June, 2016, Barclays had over-reported when it comes to 35 short interest positions in foreign-listed securities. Barclays did this by 6,489,738 shares, and had failed to report 18 positions within foreign-listed securities, which totaled to 6,275,073 shares, as well.
On 14 of the 20 sampled settlement dates within this review period, in particular, Barclays over-reported its short interest positions regarding dual-listed securities. They did so by 35 positions, which total 6,489,738 shares. Focusing in more, 13 of these sampled settlement dates had the firm report 76 short interest positions, which totaled in 12,388,903 shares. In reality, however, this should’ve been 42 short interest positions, which totals in 5,939,241 shares.
Bug In The System
As a result of these reporting errors, situations arose where the firm held positions in both the domestic and foreign-listed security within the same proprietary account. Due to a coding issue, those situations saw Barclays failing to offset the two positions in order to determine whether or not the firm held a short position. Alongside this, it failed to determine the number of shares that should be reported for the dual-listed security, as well.
Once FINRA had notified Barclays about the reporting deficiencies, the firm addressed the coding issue that had caused the violations to begin with. In regards to the remaining sampled settlement date, the firm had failed to report one position that totaled in 129,100 shares. This was due to a third party vendor of Barclays having failed to update the firm’s date about its dual-listed securities in a timely manner.
Murphy’s Law At Work
Through this conduct, Barclays stands in violation of FINRA Rule 2010 and FINRA Rule 4560. Alongside the fine, Barclays had agreed to a censure, as well.
With any luck, this will serve as a strong reminder for the finance firm, but this will only last a while, undoubtedly. Every other week, a massive finance firm is settling with some sort of regulator, paying a large fine and fixing whatever error they caused. With any luck, this will be the last for quite some time, but the probability is low.