Last Thursday, the Financial Industry Regulatory Authority (FINRA) fined Barclays Capital Inc. $3.75 million for failing to preserve electronic records and certain emails and instant messages for at least a decade.
According to FINRA, Barclays did not preserve order and trade ticket data, trade confirmations, blotters, account records and similar records from at least 2002 to 2012. It also failed to properly preserve about 3.3 million Bloomberg instant messages from October 2008 to May 2010 and certain attachments to Bloomberg emails from May 2007 to May 2010.
Barclays also failed to establish and maintain an adequate system and written procedures reasonably designed to achieve compliance with FINRA, SEC and National Association of Securities Dealers rules and to detect and remedy these deficiencies in a timely manner.
‘Ensuring the integrity, accuracy and accessibility of electronic books and records is essential to a firm’s ability to meet its compliance obligations,’ said Brad Bennett, Executive Vice President and Chief of Enforcement for FINRA. ‘The format errors in this case made it nearly impossible for Barclay’s to verify that these key materials remained in an unaltered condition.’
Federal securities laws and FINRA rules dictate that business-related electronic records be kept in non-rewritable, non-erasable format (also called the ‘WORM’ format) to prevent alteration. These requirements are considered an essential part of investor protection because a company’s books and records are an essential means of monitoring the company’s compliance with the law, particularly antifraud provisions and financial responsibility standards.
As part of the settlement terms, Barclays neither admitted or denied the charges.
Julie DiMauro is the executive editor of FCPA Blog and can be reached here.