Barclays is to pay $97m (£75m) to settle an enforcement action brought by the Securities and Exchange Commission (SEC) over claims by the US regulator that clients of Barclays Capital were overcharged for advisory fees or mutual fund sales charges
Barclays has agreed to settle three sets of violations that resulted in clients being overbilled by nearly $50m. The SEC’s investigation found that two Barclays advisory programs charged fees to more than 2,000 clients for due diligence and monitoring of certain third-party investment managers and investment strategies when in fact these services were not being performed as represented.
In addition, Barclays collected excess mutual fund sales charges or fees from 63 brokerage clients by recommending more expensive share classes when less expensive share classes were available. Another 22,138 accounts paid excess fees to Barclays due to miscalculations and billing errors by the firm.
Dabney O’Riordan, co-chief of the SEC enforcement division’s asset management unit, said: ‘Barclays failed to ensure that clients were receiving the services they were paying for. Each set of clients who were harmed are being refunded through the settlement.’
Without admitting or denying the SEC’s findings, Barclays agreed to create a fair fund to refund advisory fees to harmed clients. This will consist of $49,785,417 in disgorgement plus $13,752,242 in interest and a $30m penalty.
Barclays will directly refund an additional $3.5m to advisory clients who invested in third-party investment managers and investment strategies that underperformed while going unmonitored. Those funds also will go to brokerage clients who were steered into more expensive mutual fund share classes.