Barclays fined £26m over gold price failingsFriday 23 May 2014 17.44
Barclays bank has been fined £26m for failures in internal controls that allowed a trader to manipulate the setting of gold prices just a day after the bank was fined for rigging Libor interest rates in 2012.
Barclays is the first bank to be fined over attempted manipulation of the 95-year-old London gold market daily "fix".
However a source said the fine was a one-off and not part of a wider investigation into gold price rigging.
Today's fine marks another blow to Barclays' attempts to put past problems behind it.
The Financial Conduct Authority said there were failings at Barclays from 2004 until 2013.
But the key event occurred on June 28, 2012, a day after UK and US regulators fined it $450m over attempted Libor rigging.
"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," said Tracey McDermott, the FCA's director of enforcement and financial crime.
The FCA said it had banned former Barclays trader Daniel James Plunkett and fined him £95,600 for exploiting weaknesses in the bank's systems.
"Plunkett's actions came the day after the publication of our Libor and Euribor action against Barclays. The investigation and outcomes in that case meant that the firm, and Plunkett, were clearly on notice of the potential for conflicts of interests around benchmarks," McDermott said.
Plunkett fixed the price in order to avoid the payment of $3.9m to a customer under an option, which boosted his own trading book by $1.75m, the FCA said. The bank later compensated the client in full.
Plunkett was a director on the precious metals desk at Barclays and was responsible for pricing products linked to the price of precious metals and managing Barclays' risk exposure to those products.
Barclays Chief Executive Antony Jenkins is attempting to restore the bank's reputation after a series of scandals, but the emergence of past sins are hampering his efforts.
He has said the bank's culture, which has been criticised as high-risk, high-reward, had to change and that systems and controls were improving.
"We very much regret the situation that led to this settlement ... these situations strengthen our resolve to improve," Jenkins said.
The FCA said Barclays had co-operated with the investigation, which reduced its fine by £11m.
Barclays was the first bank to be fined for attempted manipulation of Libor, although other banks have since been fined more.
The Libor rigging scandal has put scrutiny on how all benchmark prices are set, including London's gold "fix", which dates back to 1919.
Banks arrive at the gold fix through matching buy and sell orders during a twice-daily telephone call, which miners, jewellers and central and commercial banks use to trade gold.
The daily London fixing of silver prices will end in August, and greater regulatory scrutiny is forcing major changes in how all precious metals prices are set.
The FCA and several other regulators, including Bafin in Germany and the US Commodity Futures Trading Commission, have indicated they also are looking at the gold fix.
In years gone by, seats at the gold and silver fixing tables were a mark of distinction for a bank, but now most banks do not want to be involved. Four banks now set the gold price - HSBC, Société Générale, Bank of Nova Scotia and Barclays.
The FCA said it was checking with the London Gold Market Fixing Limited to see how it was complying with new global rules for administering benchmarks that were brought in after the Libor scandal began unfolding.