FINRA ordered Barclays Capital, Inc. to pay over $10 million in restitution and $3.75m in fines for a total of $13.75 million in sanctions over a series of mutual fund-related suitability violations related to switch transactions.
In its decision, FINRA Enforcement wrote that from 2010 through 2015, deficient supervisory systems failed to prevent unsuitable mutual fund switching, in part because Barclays Capital incorrectly defined the term "mutual fund switch," which contributed to the firm's failure to act on thousands of alerts for potentially unsuitable transactions and an additional failure to send disclosure letters to customers regarding transactions costs.
FINRA estimated that over 6,100 unsuitable mutual fund switches at Barclays resulted in customer harm totaling $8.63 million.
The second violation investigators uncovered concerned Barclays' failure to provide adequate guidance to supervisors as to mutual fund suitability relative to customer investment objectives, risk tolerances, and account holdings. FINRA estimated that as a result of this suitability failure, several hundreds of customers experienced over $800,000 in financial harm, including realized losses.
Finally, FINRA concluded the Barclays' supervisory system failed to provide eligible customer discounts in nearly 100 Class A share mutual fund transactions.
If you have invested with Barclays Capital or with any broker, financial adviser or firm whose improper supervisory practices or unsuitable recommendations regarding mutual fund switches or other securities transactions have proven harmful to your investments or interests please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.