Barclays Fined £40 Million for Qatari Fundraising Misconduct
The British bank has agreed to pay £40m in fines dictated by the Financial Conduct Authority (FCA) for not disclosing Barclays’ relations with Qatari investors during its 2008 capital raising campaign. The British bank, which never wished to take a bailout during the financial crisis, bought £4 billion from Qatari investors while offering £322 million in undisclosed charges.
At first, Barclays denied the FCA report that accused it of acting recklessly and without integrity. However, the bank has recently withdrawn its appeal, arguing that the passage of time is unreasonable. Barclays issued a statement saying that while it does not agree with the FCA conclusions, it is in the best interests of the bank, shareholders and stakeholders to bring this matter to a close. The FCA accepted the difference in the understanding of the position while agreeing that Barclays has transformed.
FCA Highlights Serious Misconduct
The FCA found Barclays’ failure to disclose fee arrangements deprived investors of critical information, undermining market transparency. According to the regulator, the agreements allowed Qatar to acquire Barclays shares at discounted prices unavailable to other investors, raising questions about fairness and equity.
The misconduct occurred when there was more volatility after the aftermath of Lehman Brothers. The FCA recognized that such circumstances exist because the capital-raising process is challenging and there is pressure on the market for such activities; however, they underlined the relevance of transparency in such transactions. The fine comes as part of continual attempts by the regulatory authorities to punish actors that compromise the market’s integrity.
Long-Running Legal Proceedings Concluded
FCA started evaluating the Qatari deal in 2013, but a criminal trial by SFO halted the investigation. That trial in which three former Barclays executives were accused of inflating secret fees never went through in 2018 since the accused were not guilty of fraud.
The FCA proposed a £50 million fine in 2022, an amount that Barclays disputed until this point. The bank said that it had already provided for the penalty and would thus not be adversely affected financially by such a settlement. Steve Smart, the FCA’s Enforcement Director, agreed that Barclays has changed a lot since the events of 2008, marking a change from its past practices.
