Barclays fined £26m for gold fix failings

Barclays has been fined £26m and one of its former traders banned from working in the City for mistakes relating to the way that the gold price is fixed in London.

Almost two years after being hit by a £290m fine for rigging the Libor rate, Barclays is now facing the wrath of regulators again, this time for almost 10 years of inadequate oversight of the way it was involved in setting the price of gold, known as the fix.

Barclays' chief executive, Antony Jenkins, who was promoted to replace Bob Diamond in the wake of the Libor rigging scandal, insisted the bank was already making changes to its culture to avoid such problems happening again.

The Financial Conduct Authority said it had fined Daniel James Plunkett £95,600 and banned him from working in key roles in the City after he was tempted to make a "quick buck" from a client. His actions took place on 28 June 2012, the day after the bank was fined over Libor, which unleashed a furious public reaction and led the creation of the parliamentary commission on banking standards.

Plunkett had a role in the arcane business of monitoring the bank's risk on a "digital exotic options contract" that was based on the price at the gold fix at 3pm. If the price fixed at $1,558.96, then Barclays would have had to make a payment to a customer so Plunkett placed orders "with the intent of increasing the likelihood that the price of gold would fix below" the price. This meant Barclays did not have to pay $3.9m to its customer, and Plunkett's book profited by $1.75m.

Tracey McDermott, the FCA's director of enforcement and financial crime, said: "A firm's lack of controls and a trader's disregard for a customer's interests have allowed the financial services industry's reputation to be sullied again.

"Plunkett has paid a heavy price for putting his own interests above the integrity of the market and Barclays' customer. Traders who might be tempted to exploit their clients for a quick buck should be in no doubt, such behaviour will cost you your reputation and your livelihood."

The Barclays customer complained and the FCA said Plunkett failed to disclose that he had placed orders and traded during the gold fix. He also misled both Barclays and the FCA by providing an account of events that was untruthful.

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."

The bank said the FCA has acknowledged that Barclays brought the conduct of the former trader promptly to the attention of its predecessor, the Financial Services Authority ,and that it also fully co-operated with the FCA's investigation.

Powered by article was written by Jill Treanor, for on Friday 23rd May 2014 10.24 Europe/London © Guardian News and Media Limited 2010


JefferiesAnd the Best Place to Work in the global financial markets 2018 is...

Register for HITC Business News