FINRA fines Barclays Capital for failure to accurately report short interest positions

Maria Nikolova

From April 30, 2013 to June 30, 2016, Barclays failed to fully and accurately report its short interest positions in certain foreign-listed securities.

Barclays Capital Inc. has agreed to pay a fine of $125,000 as a part of a settlement with the United States Financial Industry Regulatory Authority (FINRA) concerning failures in reporting of short interest positions in certain foreign-listed securities.

From April 30, 2013 to June 30, 2016 (review period), Barclays over-reported 35 short interest positions in foreign-listed securities by 6,489,738 shares and failed to report 18 positions in foreign-listed securities totaling 6,275,073 shares.

In particular, on 14 of 20 sampled settlement dates during the review period, Barclays over- reported its short interest positions in dual-listed securities by 35 positions totaling 6,489,738 shares. More specifically, on 13 of the sampled settlement dates, the firm reported 76 short interest positions totaling 12,388,903 shares, when it should have reported 42 short interest positions totaling 5,939,241 shares.

Those reporting errors resulted from situations where the firm held positions in both the foreign-listed and domestic security in the same proprietary account. In those situations, due to a coding issue, Barclays failed to offset the two positions to determine whether the firm held a short position and the number of shares that should be reported for the dual-listed security.

Upon receiving notification from FINRA of the reporting deficiencies, Barclays addressed the coding issue that gave rise to the violations. On the remaining sampled settlement date, the firm over-reported one position totaling 40,076 shares due to a manual error.

In addition, on 6 of 20 sampled settlement dates during the review period, Barclays failed to report 18 short interest positions totaling 6,275,073 shares in certain foreign-listed securities. More specifically, on five of the sampled settlement dates, the firm failed to report 17 short interest positions totaling 6,145,973 shares. These failures resulted from a flawed manual review whereby the Firm failed to recognize that a security that was trading on a foreign market had become dually-listed in the United States.

Upon receiving notification from FINRA of the reporting deficiencies, Barclays addressed the oversight that gave rise to the violations. On the remaining sampled settlement date, the firm failed to report one position totaling 129,100 shares because Barclays’ third party vendor failed to timely update the firm’s data concerning its dual-listed securities.

Through this conduct, Barclays violated FINRA Rules 4560 and 2010.

In addition to the fine, Barclays has agreed to a censure.

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