Britain's Barclays is the first bank to be fined over attempted
manipulation of the 95-year-old London gold market daily "fix",
although a source said the fine was a one-off and not part of a
wider investigation into gold price rigging.
It marks another blow to Barclays' attempts to put past problems
The Financial Conduct Authority said on Friday there were failings
at Barclays from 2004 until 2013, but the key event occurred on June
28, 2012, a day after UK and U.S. regulators fined it $450 million
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 pounds 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 $3.9
million to a customer under an option, which boosted his own trading
book by $1.75 million, 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 its culture, which
has been criticized 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 co-operated with the investigation, which
reduced its fine by 11 million pounds.
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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
Banks arrive at the gold fix through matching buy and sell orders
during a twice-daily telephone call, which miners, jewelers 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 U.S. 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
Four banks now set the gold price - HSBC <HSBA.L>, Societe Generale
<SOGN.PA>, Bank of Nova Scotia <BNS.TO> 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.
($1 = 0.5931 British Pounds)
(Editing by Veronica Brown and Jane Baird)
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