REGULATION

Barclays fined $97 million for overcharging clients

SEC found Barclays overcharged clients up to $50 million in advisory fees.

By Hayley McDowell hayley.mcdowell@strategic-i.com May 11, 2017 9:14 AM GMT

Barclays has been fined $97 million by US authorities to refund advisory fees or mutual fund sales to clients who were overcharged.

The Securities and Exchange Commission (SEC) found Barclays had overcharged clients by nearly $50 million and collected excess mutual fund sales charges from 63 brokerage clients.

Barclays advised those clients to invest in more expensive share classes when less expensive share classes were available.

A further 22,138 accounts were also overcharged by Barclays due to miscalculations and billing errors by the bank. 

C. Dabney O’Riordan, co-chief of the SEC enforcement division’s asset management unit, explained Barclays “failed to ensure that clients were receiving the services they were paying for.”

The bank did not admit or deny the allegations but has agreed to create a fair fund to refund the fees. The fund will consist of more than $49 million in disgorgement plus $13 million in interest and a $30 million penalty.

Barclays will also directly refund an additional $3.5 million to advisory clients who invested in third-party investment managers and investment strategies that underperformed while going unmonitored, the SEC said.