UPDATE 3-Barclays called reckless over $511 mln payments to Qatar investors

* UK regulator plans to fine bank 50 mln stg for disclosurefailings

* Barclays says it will fight FCA's Qatar deal findings

* Barclays income down 500 mln stg July-Aug on weakinvestment bank

By Steve Slater

LONDON, Sept 16 (Reuters) - Barclays has beenbranded reckless by a British watchdog for failing to disclosepayments of 322 million pounds ($511 million) in advisory feesto Qatari investors who helped bail it out during the financialcrisis.

In its prospectus for a 5.95 billion pound ($9.4 billion)share issue, the British bank said the Financial ConductAuthority (FCA) planned to fine it 50 million pounds for itsfailure to adequately disclose the fees that have been paid overthe last five years.

The payments were made under "advisory service agreements"linked to Barclays' emergency fundraising with Qatari investors,which helped the bank avoid taking a taxpayer bailout in 2008.

"The FCA considers that Barclays ... acted recklessly," theprospectus said.

The FCA's findings are another blow to Barclays ChiefExecutive Antony Jenkins, who took over a year ago and continuesto be dogged by issues from the past as he tries to clean up hisbank after a string of scandals.

It was the first bank to be fined for its part in a globalscam to manipulate Libor interest rates and has set aside 5.5billion pounds to compensate customers for mis-sold insuranceand interest rate hedging products.

Barclays said it was fighting the FCA's findings. Thedispute could go to a tribunal, and take months to be finalised.

The watchdog, which declined further comment, issued warningnotices to Barclays last week, including notification of thefinancial penalty.

The FCA and the UK Serious Fraud Office (SFO) have beeninvestigating for about a year the circumstances surroundingBarclays' controversial fundraising from Qatar in 2008.

The U.S. Department of Justice and Securities and ExchangesCommission are also probing the bank's relationships with Qatar,and the U.S. Federal Reserve has asked to be kept informed,Barclays said.

Qatar Holding invested 5.3 billion pounds in the bank in twofundraisings, which helped it avoid the government bailouts ofrivals Lloyds and Royal Bank of Scotland.

The deal raised hackles from the outset, with othershareholders angry that Middle East investors were offeredlucrative terms.

Qatar has made over 1.5 billion pounds from its bet onBarclays, according to Reuters calculations, and is still thebank's biggest shareholder with a 6.3 percent stake. It was paid128 million pounds in fees as part of the cash calls and agreedto provide advisory services to Barclays in the Middle East.Those services have been the subject of the investigations.

WEAK TRADING

Barclays' prospectus also said its income in July and Augustfell by 500 million pounds from a year ago as revenue in itsinvestment bank was significantly below the previous year.

The weak trading was mainly in its fixed income, currenciesand commodities division and left adjusted income for the eightmonths to the end of August down 5 percent on the year.

Daily income for its investment bank so far this month wasahead of July and August but below September 2012, it said.

Investors shrugged off the Qatar investigation and weaktrading and said the rights issues should attract strong demand.Barclays shares were up 1.6 percent at 306.6 pence by 1450 GMT.

Barclays launched its rights issue of new stock to plug a12.8 billion pound capital shortfall identified by Britain'sregulator in July.

It is offering shareholders one new share at 185 pence forevery four they own. The bank expects the new shares to starttrading on Oct. 4.

Risk disclosures in the 185-page prospectus showed the bankis battling on several other fronts.

It said it could also lose C$500 million ($484 million) froma dispute in Canada related to the sale of credit default swaps.Barclays lost a court case against Devonshire Trust, anasset-backed commercial paper trust, two years ago and in Julythe Court of Appeal for Ontario dismissed its appeal. Barclayssaid it was considering its options.

The bank said it would continue to "vigorously" defenditself against a record $453 million fine imposed by a U.S.energy regulator in July. The fine imposed by the Federal EnergyRegulatory Commission (FERC) relates to power trading in thewestern United States from 2006 to 2008.

Barclays said the criminal division of the United StatesAttorney's Office in the Southern District of New York was alsonow looking at the same conduct issues as FERC.