Scandal strikes again: Barclays fined £26m over gold price fixing
- 23 May 2014
In the latest of a long line of scandals for the bank, Barclays has been fined £26 million for its part in fixing the price of gold.
The City watchdog, the Financial Conduct Authority (FCA), has revealed for nearly a decade – between 2004 and 2013 – the bank had failed to put adequate controls in place to ensure price fixing of the precious metal could not occur.
The weaknesses in the system were exploited on 28 June 2012 by a Barclays trader Daniel Plunkett, who was director on the precious metals desk and responsible for pricing products linked to the price of gold.
He was able to exploit the lack of controls at Barclays to fix the price of gold on this date below a certain barrier which meant he did not have to make a $3.9 million payment to a customer and boosted his own trading book by $1.75 million.
Plunkett did this by placing certain trades that would ensure the price of gold remained below the barrier by the 3pm deadline on 28 June 2012. However, the customer who was refused payment realised the price had been fixed and demanded an explanation from the bank but Plunkett failed to disclose his trades.
The FCA said Plunkett’s misconduct ‘is particularly serious because he preferred his interests ove those of a customer and his actions had the potential to have an adverse effect on the gold fixing and the UK and international financial markets’.
Separately from the Barclays’ fine, Plunkett has been fined £95,000 and banned from working in a regulated capacity.
Plunkett’s misconduct served to highlight the lack of control Barclays had over its gold trading desk, which the FCA breached a number of business principles, including training staff, adequate monitoring and procedures to ensure safe gold trading.
Tracey McDermott, FCA 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.’
McDermott added that Barclays failing were ‘extremely disappointing’ given the context of previous actions against the bank over its part in Libor fixing.
In June 2012, Barclays was fined £290 million for its part in the rigging of Libor rates. The scandal cost top executives at the bank their jobs and has prompted lawsuits and investigations by the Serious Fraud Office and similar organisation in the US.
Mindful money Mortgage Tool Box
Looking To Re-mortgage
How Much Could You Borrow
How Much Is Your Home Worth
Find a Mortgage Advisor
- At last the real scandal emerges - the lid is lifted on the disgrace of old style overcharging pension contracts
- Experts tip the stocks to watch in 2015
- Inflation falls to 12-year low of 1% as petrol and food prices drop
- Russia raises interest rates to 17%, but rouble continues to plummet
- What does 2015 hold for the world's developed markets?
- Co-op fails Bank of England stress test
- MPs warn pension freedoms risk being next mis-selling scandal
- Britain is swiftly becoming of a nation of ‘pre-tirees' claims new report
- UK starting salaries among the lowest of major European economies
- BT in exclusive talks to buy EE for £12.5bn