Barclays Capital will pay a $1.8 million fine to settle charges by the Financial Services Authority - the U.K.'s SEC - it had failed to put a fence around clients’ funds held in money market accounts.  In the U.K., banks must keep client money separate from their own by holding it in trust accounts on an intraday basis.  Barclays allegedly failed to do so for 8 years, segregating the money only overnight.

“Had the firm become insolvent within the five to seven hours each day in which the funds were unsegregated, this client money would have been at risk of loss.”  - - FSA.

The fine was reduced based on these factors:  no Barclays clients lost money because of the error;  the bank had not acted deliberately.

In June, JPMorgan Securities was fined  record $52.8 million for a similar error, but one on a much larger scale. JPMorgan had failed to segregate $23 billion of client money, whereas Barclays had never put at risk more than £752 million. 

This is the second fine in 2 weeks for Barclays , which was fined over $12 million for failing to properly advise certain customers on the suitability of investments.  

In a separate announcement, the Barclays retail banking group said it planned to move financial planning services online, which could result in job cuts.  The move “follows a decline in commercial viability for such services over recent years, and the expectation that this decline will continue,” the bank said. Barclays is proposing to close the unit on Feb. 18, a spokesman said.   [NYT Dealbook, 1/26]