On Sept. 29, the SEC ordered Barclays and Barclays Bank to pay a $200 million civil penalty and ordered Barclays Bank to pay disgorgement of $149.7 million and prejudgment interest of $11.5 million, deemed satisfied by an offer of rescission made to investors in the unregistered offerings.
According to the SEC order, from 2019 to March of this year, Barclays Bank “offered and sold approximately $17.7 billion of securities in unregistered transactions,” because it failed to implement internal controls to track such transactions in real-time. “This case highlights why it is essential for firms like Barclays to have robust internal controls over their offers and sales of securities,” said SEC Division of Enforcement Director Gurbir Grewal.
The SEC’s order states that, following a previously settled SEC action against Barclays in May 2017, the bank lost its “well-known seasoned issuer” (WKSI) status. Consequently, the bank was required to quantify the total number of securities it anticipated offering and selling and pay registration fees for those offerings upon the filing of a new registration statement.
Given this requirement, Barclays Bank personnel understood the firm needed to track actual offers and sales of securities against the amount of registered offers and sales on a real-time basis, the SEC said. Yet, it failed to establish any internal controls for this purpose.
The filing fees for the bank’s 2019 maximum covered the offer or sale of approximately $20.8 billion of securities for a period of three years. On March 9, 2022, an internal review found the bank had offered and sold well over the amount registered with the SEC. The first over-issuance occurred around January 2021, when the bank offered and sold approximately $16.37 billion of securities in excess of the amount registered with the SEC, according to the order.
The broader compliance lesson is this: “All issuers should maintain robust internal controls to prevent offering and selling securities in unregistered transactions,” said Sheldon Pollock, Associate Regional Director of the SEC’s New York Regional Office. “We encourage any firms that have lost WKSI status to ensure the stability of their internal controls and to self-report any over-issuances, should any be found.”
According to the SEC order, Barclays Bank self-reported its over-issuances to regulators, provided meaningful cooperation during the SEC staff’s investigation, and subsequently commenced a rescission offer. “While we acknowledge Barclays’ efforts to identify, disclose and remediate this conduct, the control deficiencies and the scope of the conduct at issue here was simply staggering,” Grewal said.
The SEC’s order finds that Barclays Bank violated provisions of the Securities Act of 1933 and that both firms violated provisions of the Securities Exchange Act of 1934. Without admitting or denying the SEC’s findings, both firms agreed to cease-and-desist from violating the charged provisions and to comply with certain undertakings designed to effect compliance with Section 5 of the Securities Act. 
Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.