Barclays Fined £26m Over Trader's Gold Fixing

Written By Unknown on Jumat, 23 Mei 2014 | 18.56

Barclays Bank has been fined more than £26m by the City watchdog over failings related to gold price manipulation by one of its former traders.

The Financial Conduct Authority (FCA) said the bank failed to adequately manage conflicts of interest between itself and customers.

It said oversight failures occurred between 2004 and 2013 led to the £26,033,500 fine.

The trader manipulated the rate in the bank's interest just a day after UK and US regulators fined it $450m (£290m) over attempted rigging of the Libor - an interbank lending rate - that has global impact.

Barclays was fined for oversight failures and not for the price manipulation by the worker.

It agreed to settle the case at an early stage, saving itself a 30% additional penalty.

Gold fixing is a financial term used to describe the somewhat arcane price-setting mechanism that allows investors to buy and sell gold at a single quoted price.

Barclays is one of four banks that sets the price of the precious metal twice a day, in US dollars, on the London Gold Exchange and in Paris and Zurich.

It joined the group in 2004, and the other members are Scotiabank, Societe Generale and HSBC.

The FCA said: "On 28 June 2012, former Barclays trader Daniel James Plunkett exploited the weaknesses in Barclays' systems and controls to seek to influence that day's 3pm setting of the gold price and thereby profited at a customer's expense.

Antony Jenkins Barclays boss Antony Jenkins has apologised for the latest scandal

"As a result of Plunkett's actions, Barclays was not obligated to make a $3.9m (£2.3m) payment to its customer, although it later compensated the customer in full.

"Plunkett's actions boosted his own trading book by $1.75m - £1m - (excluding hedging)."

The watchdog also fined Mr Plunkett £95,600 and has banned him from performing any function in relation to any regulated activity.

He can, however, work in financial markets in other countries.

The FCA said the trader used the phrase "mini puke" in an email to describe the drop in gold price ahead of the June 28 pricing figure.

Responding to the latest fine imposed by regulators, Barclays CEO Antony Jenkins said: "We very much regret the situation that led to this settlement.

"Barclays has undertaken a significant amount of work to enhance our systems and controls and is committed to the highest standards across all of our operations."

Meanwhile, the chairman of the Treasury Select Committee welcomed the ongoing attempts to improve integrity of the much-maligned banking sector.

Andrew Tyrie MP, the former chairman of the Parliamentary Commission on Banking Standards, said: "It is essential that the regulators do what is necessary to give us confidence that the integrity of these markets is being maintained.

"It is equally essential that the drive to improve standards with the fundamental reforms outlined by the Parliamentary Commission among others is maintained."

The gold price manipulation scandal is the latest issue to tarnish the reputation of Barclays.

It recently suffered a shareholder backlash - announcing a 32% fall in annual profits to £5.2bn but raising its staff bonus pool by 10% to £2.38bn.


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