Gold failings cost Barclays £26m

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BARCLAYS has been fined £26 million by the City watchdog over failings in relation to the fixing of the price of gold over a nine-year period.

The Financial Conduct Authority (FCA) said the bank had failed to manage conflicts of interest between itself and its customers in relation to the way the price of gold is set, between 2004 and 2013.

Its announcement focused on the behaviour of Daniel James Plunkett, who was a trader on the Barclays precious metals desk, on June 28 2012.

The FCA said that, on that day, Mr Plunkett “exploited the weaknesses in Barclays’ systems and controls to seek to influence that day’s 3pm gold fixing and thereby profited at a customer’s expense”.

It said that, as a result, Barclays did not have to make a 3.9 million US dollar (£2.3 million) payment to a customer, though it later compensated the customer in full.

Mr Plunkett’s actions boosted his own trading book by 1.75 million US dollars (£1.04 million), the FCA said.

The watchdog has fined him £95,600 and banned him from the industry.

Mr Plunkett’s actions came just after Barclays had agreed a £290 million settlement with US and UK regulators over the rigging of Libor and Euribor interbank lending rates in a scandal that precipitated the resignation of chief executive Bob Diamond.

Tracey McDermott, the FCA’s director of enforcement and financial crime, said the gold-fixing failings had once again tarnished the industry’s reputation.

She 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.

“Barclays’ failure to identify and manage the risks in its business was extremely disappointing. 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.

“We expect all firms to look hard at their reference rate and benchmark operations to ensure this type of behaviour isn’t being replicated.

“Firms should be in no doubt that the spotlight will remain on wholesale conduct and we will hold them to account if they fail to meet our standards.”

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