FINRA announced that Barclays Capital Inc. had agreed to pay a $3mn fine to settle charges that the firm misrepresented delinquency data related to the issuance of residential subprime mortgage securitizations (RMBS's).  FINRA also tacked on inadequate supervision. Issuer Obligations. Issuers of subprime RMBS are required to disclose historical performance information for past securitizations containing mortgage loans similar to those in the RMBS being offered to investors.  Historical delinquency rates are important in assessing the value of an RMBS, because they indicate the likelihood that future returns may be disrupted by mortgage holders' failures to make loan payments. FINRA Findings and Allegations. For nearly 4 full years - from March 2007 through December 2010 - Barclays allegedly misrepresented the historical delinquency rates for 3 subprime RMBS the firm underwrote and sold.  During the prior 3-year period, Barclays underwrote RMBS's.  At the time, Regulation AB was the source for various disclosure items and requirements for such securities, filed under Securities Act of 1933 and the Securities Exchange Act of 1934.

Regulation AB .... , as it pertained to the Barclays underwritings, required the firm to maintain a website for each newly-issued RMBS (the “Reg AB” website) that presented static pool infonnation - aka, historical delinquency data - for prior similar securitizations to illustrate the past performance of securitizations that contained similar collateral.

In March 2007, Barclays re-configured its Reg AB website - but in doing so, failed to review the posted delinquency data.  As a result, Barclays did not detect that inaccurate delinquency information for 3 RMBS securitizations had been posted, to the website. And, it was not until December 2010, that Barclays - in response to a FINRA inquiry - updated the erroneous disclosures.  Thus, from March 2007 through December 2010, the Firm’s Reg AB website contained material inaccuracies on the performance of the 3 subprime RMBS's. That materially inaccurate delinquency data was referenced on the site as "historical information" for each of 5 subsequent RMBS investments.  Barclays's supervision failed to prevent the erroneous information from being posted, then failed to detect the errors in the process of maintaining and updating relevant disclosures on the Web site. FINRA Staff Credits. Investigation by:  Allen Boyer, Andrew Kampel;  supervised by  Susan Light, Enforcement Chief Counsel. For further details, go to:   [FINRA News Release, 12/22/11]   and [FINRA AWC #2008012808801]