Barclays Capital Fined Nearly $100 Million for Overcharging Advisory Clients

Barclays’s investment advisement unit, Barclays Capital, agreed today to dole out $97 million to end the U.S. regulator’s allegations that it over-billed about 25,000 advisory clients.

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The Securities and Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Commission (SEC) said that the bank overcharged clients by approximately $50 million because it lacked procedures to validate whether clients were properly billed.

More specifically, Barclays Capital was charged with collecting fees from more than 2,000 clients through two advisory programs for the monitoring of certain third-party investment managers and investment strategies although these services weren't being performed as described.

In addition, Barclays also settled allegations that it received excess mutual fund sales fees from 63 brokerage clients by steering them into more expensive share classes while less expensive alternatives were available, the SEC concluded. The agency also estimated that the London-based bank received excess fees from another 22,138 accounts due to miscalculations and other billing system errors.

Without admitting or denying the SEC’s findings, Barclays agreed to reimburse the affected clients, the top US regulator explained in a statement. The aggregated fine consists of $50 million in disgorgement fees plus $14 million in prejudgement interest and a $30 million penalty. In addition, Barclays will pay an additional $3.5 million to advisory clients who paid fees for due diligence that wasn’t being performed.

Dabney O’Riordan, co-head of the SEC’s enforcement unit, commented: “Barclays failed to ensure that clients were receiving the services they were paying for. Each set of clients who were harmed are being refunded through the settlement.”

Several banks have been caught overcharging investment advisory clients and are now facing lawsuits from clients who believe that they have been ripped off. The fine is one of the largest dished out by the SEC in recent years, and the latest where banks have been found to put profit before the interest of their customers.