In May 2017, Barclays Capital agreed to a $97 million settlement alleging that its Wealth and Investment Management Americas units sold to Stifel Financial overcharged more than 24,000 clients by $50 million in advisory fees between September 2010 and December 2015, according to the Securities and Exchange Commission (SEC). The penalty includes $30 million in fines, $63.8 million in disgorgement and interest, and $3.5 million refunded to advisory clients with underperforming accounts.
According to the order, “Barclays Capital disadvantaged certain retirement plan and charitable organization brokerage customers (“Eligible Customers”) by recommending and selling them more expensive mutual fund share classes when less expensive share classes were available, without disclosing that Barclays Capital had a material conflict of interest, i.e., that it would receive greater compensation from the Eligible Customers’ purchases of the more expensive share classes.”
Additionally, Barclays Capital failed to conduct ongoing due diligence and monitoring on investment strategies with third-party managers who managed advisory clients’ assets in two wrap accounts, the Select Advisors Program and the Accommodation Manager Program. Barclays charged fees of between 0.32% and 1.75% of assets, which were supposed to cover due diligence and monitoring of investment strategies.
Barclays Capital improperly charged 2,050 client accounts approximately $48 million in fees for these promised services from September 2010 through December 2014, and from January 2011 through March 2015, Barclays Capital charged 22,138 client accounts excess fees of approximately $2 million as a result of inaccurate pricing information for quarterly billing.
Additionally, 63 other customers paid more than $110,000 in fees in accounts because they were sold share classes more expensive than the Class R shares that they were eligible, while other qualified customers were sold Class A shares without upfront sales charges waived.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, brokerage firms across the country may be liable for investment or other losses suffered as a result of investments in Barclays Capital.
Erez Law represents investors in the United States for claims against Barclays Capital and its Wealth and Investment Management Americas units that sold to Stifel Financial and overcharged clients. If you invested in Barclays Capital, and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.
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