According to FINRA, Barclays Capital Inc. was censured and fined $325,000 for failing to establish and maintain an adequate supervisory system for employee outside brokerage accounts, resulting in significant compliance gaps during the COVID-19 pandemic.

When the firm's offices closed in March 2020 due to the pandemic, resulting delays and organizational changes created a substantial backlog of unreviewed or missing account statements. Rather than promptly addressing this backlog, the firm allowed the problem to persist. From July 2021 through June 2022, Barclays failed to either collect or timely review approximately 8,200 account statements from roughly 700 employee-held outside brokerage accounts—representing about half of all outside accounts for which the firm did not receive an electronic data feed.

During this period of inadequate supervision, firm employees executed 161 trades in these outside accounts without first obtaining required preclearance. These unauthorized trades went undetected due to the backlog of unreviewed and missing statements. The failure to monitor employee trading in outside accounts creates significant risks, as employees may engage in conflicts of interest, front-running, or other prohibited trading practices.

FINRA rules require firms to receive duplicate statements or confirmations for employee accounts held at other broker-dealers and to review these accounts regularly. These requirements help prevent insider trading, conflicts of interest, and other misconduct.

Barclays ultimately remediated its supervisory deficiencies by modifying its review system, establishing electronic feeds for a significant percentage of outside accounts, and implementing a system for employees to upload statements for accounts without electronic feeds. The firm also completed a comprehensive remedial review of the backlog. This case demonstrates that firms cannot allow operational challenges, even those caused by extraordinary circumstances, to excuse fundamental supervisory obligations that protect market integrity.