The U.S. Securities and Exchange Commission ("SEC") has announced the resolution of its investigation of Barclays PLC ("BPLC") and Barclays Bank PLC ("BBPLC") relating to the over-issuance of securities by BBPLC under certain of its U.S. shelf registration statements. Pursuant to the terms of the resolution and as reflected in BPLC's and BBPLC's H122 Results Announcements, BPLC and BBPLC will pay a combined penalty of U.S.$200 million, without admitting or denying the SEC's findings. The SEC has confirmed that BBPLC's independent rescission offer to noteholders satisfies its requirements for disgorgement and related prejudgment interest.
Financial impact of the over-issuance
Further to the announcement on 15 September 2022 concerning the expiration of the rescission offer, Barclays confirms that the net cumulative attributable loss after tax in relation to the over-issuance of securities in the U.S. is expected to remain materially in line with the financial impact disclosed in BPLC's and BBPLC's H122 Results. Further details will be provided as part of BPLC's Q322 Results Announcement to be published on or about 26 October 2022, including the extent to which changes in market prices of affected securities have resulted in a reduction in costs associated with the rescission offer, offset by a corresponding reduction in income associated with hedging arrangements.
Review led by external counsel
The previously announced review of the facts and circumstances relating to the over-issuance and the control environment related to such issuances led by external counsel ("Review") is now complete. The over-issuance occurred because Barclays did not put in place a mechanism to track issuances after BBPLC became subject to a limit on issuance. Among the principal causes of the over-issuance were, first, the failure to identify and escalate to senior executives the consequences of the loss of well-known issuer status and, secondly, a decentralised ownership structure for securities issuances.
The Review further concluded that the occurrence of the over-issuance was not the result of a general lack of attention to controls by Barclays, and that Barclays' management has consistently emphasised the importance of maintaining effective controls.
The Review's findings will be used to consider individual accountabilities in relation to this matter and may include adjustments to remuneration, including to past variable remuneration, the potential for disciplinary action and performance management as appropriate.
Note: The BPLC and BBPLC H122 Results referred to above include further disclosures in relation to the over-issuance of securities.