Speak To A Live Person: 888.302.4594 Request A Demo

Firm to Pay $3.75 Million Fine for Failing to Store Emails in Proper Format

Sunday, April 20, 2014

Barclays Capital Inc. self-reported to FINRA that it failed to preserve electronic business-related records in non-rewritable, non-erasable format (also referred to as “Write-Once, Read-Many” or “WORM” format). Specifically, Barclays reported that it failed to retain countless attachments to emails sent through Bloomberg L.P., and failed to retain approximately 3.3 million instant messages (“IMs”) communicated through Bloomberg.

Although Barclays performed conformance testing and validation in connection with its records management program, the testing did not focus on the format in which the records were being stored or software malfunction. The firm relied on a software program to save the electronic messages for retrieval, but there was a configuration error with the program that was not detected for three years which failed to associate attachments with subsequently processed emails that included the same attachment, and rather saved the attachments as parsed text, which was not WORM compliant. Barclays estimated it generated 500,000 emails on a daily basis. Since the software program was functioning according to its default settings (which were improperly configured), no alerts were generated indicating that the program had malfunctioned. IMs were not saved into their database due to a similar software program malfunction.

As related to these issues, Barclays failed to establish and maintain an adequate Written Supervisory Procedures compliance document along with an adequate system to avoid such failures. Further, the firm did not have an individual or group at the Firm that was responsible for preparing Written Supervisory Procedures aimed at WORM compliance, and did not have auditing specifically designed to verify WORM compliance. Written Supervisory Procedures must be reasonably designed to achieve compliance with applicable securities laws and regulations.

Due to these failures and violations stated above of Exchange Act Rule 17a-4, NASD Rules 3110 and 2110 and FINRA Rules 4511 and 2010, in December 2013 Barclays agreed to pay the $3.75 million dollar fine, and Censure.

Further information on this settlement of the alleged rule violations is accessible by clicking here.

About Red Oak Compliance Solutions

Red Oak Compliance Solutions is a leading provider of intelligent compliance software, offering a range of AI-powered solutions designed to help firms of all sizes successfully navigate the increasingly complex regulatory landscape. Our suite of 17(a)-4/WORM compliant features offer risk minimization, cost reduction, and process optimization capabilities with features that are designed to evolve with our client’s needs. Our flagship advertising review software enables firms to deliver compliant content to the market with confidence, faster. Our Disclosure Management and Intelligence solution simplifies the management of disclosures, while our Registration Management solution automates and streamlines the licensing and registration process, further enhancing your internal processes. 

  • Categories

  • Get Started