According to FINRA, Barclays Capital Inc., based in New York, New York, was censured, fined $1,250,000, and required to certify that it has reviewed its systems and procedures for failing to fingerprint and screen thousands of non-registered associated persons. The firm was found in violation of FINRA rules and Securities Exchange Act requirements related to fingerprinting and recordkeeping.
Fingerprinting requirements exist to ensure that individuals associated with broker-dealers are screened for criminal history and statutory disqualification before being permitted to work in the securities industry. This is a fundamental investor protection measure designed to prevent individuals with disqualifying criminal records or regulatory histories from gaining access to sensitive customer information, financial systems, and market infrastructure.
The findings revealed that Barclays Capital failed to timely fingerprint and screen for statutory disqualification 2,317 non-registered associated persons based in foreign locations. The firm also failed to timely fingerprint 1,663 U.S.-based non-registered associated persons. In total, the firm failed to make and keep current required fingerprint records for 3,980 non-registered associated persons. The firm's written supervisory procedures compounded the problem by failing to require individuals based in foreign locations to be fingerprinted and screened for statutory disqualification at all.
The scale of this failure is significant. Nearly 4,000 individuals were able to associate with a major global broker-dealer without undergoing the required background screening. While non-registered associated persons may not directly execute securities transactions, they may have access to customer data, internal systems, and other sensitive information. Without proper fingerprinting and screening, the firm could not verify whether any of these individuals had criminal histories or regulatory disqualifications that should have prevented their association.
For investors, this case highlights the importance of the regulatory framework that governs who is permitted to work in the securities industry. Fingerprinting and background screening are not mere administrative formalities; they are essential safeguards that help ensure the people with access to the financial system are trustworthy. When a firm of Barclays' size and stature fails to comply with these basic requirements on such a large scale, it raises questions about the rigor of the firm's overall compliance culture. Investors should take comfort that FINRA actively enforces these requirements and imposes substantial fines to deter such failures.
