FINRA Decision: Barclays Capital Fined $3 Million

A major concern in the investment industry is that investors should be, but often are not, provided with sufficient and accurate information on their investments which will allow them to make informed investment decisions. A recent Financial Industry Regulatory Authority (FINRA) securities arbitration case resulted in Barclays Capital Inc. being fined for failure to adequately supervise the issuance of residential subprime mortgage securitizations, plus misrepresentation of delinquency data. Of the case, FINRA Executive Vice President and Chief of Enforcement Brad Bennett stated, “investors were supplied inaccurate information to assess future performance of RMBS investments.”

According to FINRA, “historical performance information for past securitizations that contain mortgage loans similar to those in the RMBS being offered to investors” must be disclosed by issuers of residential subprime mortgage securitizations. This information is vital to investors’ attempts to determine if the failure of mortgage holders to make payments could disrupt future returns. Therefore, without this information, investors cannot make an adequately informed decision about their investment.

According to FINRA’s investigation, the historical delinquency rates of three subprime RMBS, for which Barclays was underwriter and seller, were misrepresented from March 2007 through December 2010.

“The inaccurate delinquency data posted on Barclays’ website was referenced as historical information in five subsequent RMBS investments and contained errors significant enough to affect an investor’s assessment of subsequent securitizations,” FINRA stated. “Additionally, Barclays failed to establish an adequate system to supervise the maintenance and updating of relevant disclosure on its website.”

Barclays Capital was fined $3 million for its actions. Barclays submitted to FINRA’s findings but neither admitted nor denied the charged against them.

If you made investment decisions based on information provided to you by Barclays or another firm that you believe was falsified or incorrect and suffered losses as a result, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.