U.K. regulator the Financial Services Authority has fined Barclays, the banking group, $4.09 million for a series of internal control and compliance breaches and warned other firms it will not tolerate such failings.

The FSA fined Barclays a “significantly higher” penalty than it had done in similar cases in the past because its failings were serious and it wanted to make an example of the bank. The fine would have been $5.8 million if Barclays had not settled early.

Barclays had failed to give the FSA accurate transaction reports and had “serious weaknesses” in its systems and controls related to transaction reporting, the regulator said.

Financial firms are supposed to send the FSA data for reportable market transactions by close of business the day after a trade is executed. The regulator uses this data to detect and investigate suspected market abuse, such as insider trading.

The FSA uncovered the problems at Barclays Capital Securities Ltd and Barclays Bank PLC when it was investigating suspicions of market abuse at another company. A review then found that the bank did not have adequate systems and controls in place to meet the transaction reporting requirements. The FSA also found “a substantial number of errors” in the data the bank had given it.

Alexander Justham, FSA director of markets, said, “Barclays’ reporting failures could have a damaging impact on our ability to detect and investigate suspected market abuse.”

The FSA said Barclays had broken its rules despite repeated reminders to firms during 2007 and 2008 about their obligations to provide accurate data and the importance of compliance with the FSA’s rules on transaction reporting.

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