FINRA Fines Barclays $3M For Misrepresenting RMBS Data

The Financial Industry Regulatory Authority (FINRA) has fined Barclays Capital Inc. $3 million for providing bad data to subprime residential mortgage-backed securities (RMBS) investors.

RMBS issuers such as Barclays are required to provide historical delinquency information for past securitizations that contain mortgage loans similar to those in the RMBS being offered to investors. FINRA says it found that, from March 2007 through December 2010, Barclays misrepresented the historical delinquency rates for three subprime RMBS it underwrote and sold.

According to FINRA, the inaccurate delinquency data posted on Barclays' website was referenced as historical information in five subsequent RMBS investments and contained errors significant enough to affect an investor's assessment of subsequent securitizations.

FINRA additionally tagged Barclays for failing to establish an adequate system for the maintenance and updating of relevant disclosures on its website.

"Barclays did not have a system in place to ensure that delinquency data posted on its website was accurate; therefore, investors were supplied inaccurate information to assess future performance of RMBS investments," says Brad Bennett, FINRA's executive vice president and chief of enforcement.

In settling this matter, Barclays neither admitted nor denied the charges, but consented to the entry of FINRA's findings.


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