Barclays hit by fresh U.S. investigations

Wed Oct 31, 2012 7:24am EDT
 
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By Steve Slater and Matt Scuffham

LONDON (Reuters) - Barclays, already rocked by an interest rate rigging scandal, unveiled new U.S. regulatory investigations into the bank's financial probity on Wednesday and said its profit was hit by charges for mis-selling insurance.

Its shares fell almost 5 percent, hurt by a weaker performance in investment banking than most of its Wall Street rivals and fears that legal problems would handicap its new chief executive's efforts to overhaul the company.

Following investigations in the UK over its dealings with Qatari investors, Barclays said the Department of Justice and Securities and Exchange Commission were probing whether its relationships with third parties who help it win or retain business are compliant with U.S. laws.

The bank is under investigation by Britain's financial regulator and fraud prosecutor into payments to Qatari investors after it raised billions of pounds from the Gulf state five years ago to save it from taking a taxpayer bailout.

Barclays revealed the Financial Services Authority (FSA) investigation in July and confirmed the Serious Fraud Office had launched a probe the following month.

Barclays also said on Wednesday the U.S. Federal Energy Regulatory Commission could be close to fining it over an investigation into the manipulation of power prices in the western United States from late 2006 until 2008.

FERC could notify the bank of proposed penalties as early as Wednesday, and Barclays said it would "vigorously" defend this matter. The investigation was first announced in April, alleging the bank took substantial electricity market positions to move daily index settlements.

In March, the agency fined Constellation Energy a record $245 million over power market manipulation activities as part of a fresh crackdown on power market rigging.   Continued...

 
Barclays bank headquarters in Canary Wharf, east London August 30, 2012. REUTERS/Olivia Harris