The UK's Financial Conduct Authority has fined Barclays £50m for disclosure failures linked to a capital raisings announced on 25 June 2008 and 31 October 2008 during the Global Financial Crisis, when the bank entered into arrangements with Qatari entities.
The regulator said: "Barclays' conduct in the October capital raising was reckless and lacked integrity."
Barclays has referred the FCA's Decision Notices on the affair to the Upper Tribunal, which is independent of the FCA. Its role is to hear references arising from Decision Notices or Supervisory Notices issued by the regulator. It also has a role in relation to consumer redress schemes.
Because of the referral, the FCA has announced that "findings in the Notices are therefore provisional and reflect the FCA's belief as to what occurred and how it considers the firms' behaviour should be characterised."
It means that the Decision Notices will have not effect pending any decisions by the Upper Tribunal. However, the FCA added that the the case could also determine "whether there are any other actions that should be taken by the FCA".
Regarding the reasons for the fine, the FCA said that as part of the capital raisings, Barclays agreed to "advisory" payments to one Qatari entity totally £322m over three and five years respectively.
"These payments were calculated specifically by reference to the Qataris' financial demands for investing in the capital raisings, not the value of the advisory services that Barclays expected to receive under the agreements," the FCA said.
But while Barclays disclosed it had entered into an advisory agreement in June 2008, it did not disclose the October agreement. Nor did it disclose the payments under the capital raisings, nor their connection to the Qatari entities' participation in the capital raisings.
"The disclosure of the payments would have had a material impact on the terms of the capital raisings as disclosed, more than doubling the disclosed level of payments due to the Qatari entities in connection with their participation in the June capital raising and tripling the payments due to them in connection with their participation in the October capital raising," the FCA said.
"The FCA considers that it would have been highly relevant information to shareholders, investors and the wider market, especially in October 2008, in circumstances where the disclosed costs were already perceived to be very expensive."
The regulator issued Warning Notices against Barclays in 2013. However, the case was paused when the Serious Fraud Office brought proceedings against the bank and others. When these proceedings ended in 2019, the FCA restarted its own case.
Mark Steward, executive director of Enforcement and Market Oversight at the FCA said: "At the height of the financial crisis in October 2008, Barclays paid hundreds of millions of pounds in fees to certain Qatari investors so that they would contribute new capital."
"Barclays did not inform the market and shareholders about these matters as required. Barclays' failure to disclose these matters was reckless and lacked integrity and followed an earlier failure to disclose fees paid to Qatari investors in June 2008. There was no legitimate reason or excuse for failing to disclose these matters, certainly no basis for doing so because of the financial crisis. Due transparency is always critical to financial markets, especially in times of market or financial stress. These findings by the FCA will now be considered by the Upper Tribunal."
