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| Barclays Bank fined £26m for gold price failings | Barclays Bank fined £26m for gold price failings |
| (about 1 hour later) | |
| Barclays Bank has been fined £26m by UK regulators after one of its traders was discovered attempting to fix the price of gold. | Barclays Bank has been fined £26m by UK regulators after one of its traders was discovered attempting to fix the price of gold. |
| The trader, who has been sacked, exploited weaknesses in the system to profit at a customer's expense, the Financial Conduct Authority (FCA) said. | The trader, who has been sacked, exploited weaknesses in the system to profit at a customer's expense, the Financial Conduct Authority (FCA) said. |
| The incident occurred in June 2012, the day after the bank was fined a record £290m for attempting to rig Libor. | The incident occurred in June 2012, the day after the bank was fined a record £290m for attempting to rig Libor. |
| Barclays said it "very much regrets the situation" that led to the fine. | Barclays said it "very much regrets the situation" that led to the fine. |
| The FCA found the bank failed to "adequately manage conflicts of interest between itself and its customers", in relation to fixing the price of gold. | The FCA found the bank failed to "adequately manage conflicts of interest between itself and its customers", in relation to fixing the price of gold. |
| "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," said Antony Jenkins, group chief executive. | "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," said Antony Jenkins, group chief executive. |
| The FCA also fined the trader, Daniel James Plunkett, £96,500. | The FCA also fined the trader, Daniel James Plunkett, £96,500. |
| "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. | "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. |
| "Barclays' failure to identify and manage the risks in its business was extremely disappointing." | "Barclays' failure to identify and manage the risks in its business was extremely disappointing." |
| Barclays and Mr Plunkett agreed to settle at an early stage, thereby qualifying for a 30% discount on their fines. | Barclays and Mr Plunkett agreed to settle at an early stage, thereby qualifying for a 30% discount on their fines. |
| Fake orders | Fake orders |
| Mr Plunkett was a director on the precious metals desk. | Mr Plunkett was a director on the precious metals desk. |
| He was responsible for pricing and managing Barclays' risk on a contract that was specifically linked to the price of gold at 3:00p.m. on 28 June 2012. | He was responsible for pricing and managing Barclays' risk on a contract that was specifically linked to the price of gold at 3:00p.m. on 28 June 2012. |
| If the gold price was above $1,558.96 (£925.57) at that time then Barclays would be required to make a payment of $3.9m to its customer. | If the gold price was above $1,558.96 (£925.57) at that time then Barclays would be required to make a payment of $3.9m to its customer. |
| But if the price was below that benchmark Barclays would not have to make the payment. | But if the price was below that benchmark Barclays would not have to make the payment. |
| Mr Plunkett created fake orders with the intent of pushing the price of gold below $1,588.96, which he succeeded in doing. | |
| The result was Barclays was not obligated to make the $3.9m payment to its customer, and Mr Plunkett booked a profit of $1.75m for the bank. | The result was Barclays was not obligated to make the $3.9m payment to its customer, and Mr Plunkett booked a profit of $1.75m for the bank. |
| When the customer learned of this, an explanation was sought from Barclays. The concerns were then relayed to Mr Plunkett on 28 and 29 June 2012. | When the customer learned of this, an explanation was sought from Barclays. The concerns were then relayed to Mr Plunkett on 28 and 29 June 2012. |
| The FCA said he misled both Barclays and the regulator by providing a false account of events and failing to admit that he had placed the fake orders. | The FCA said he misled both Barclays and the regulator by providing a false account of events and failing to admit that he had placed the fake orders. |
| Gold Fixing is a price setting mechanism that allows investors to buy and sell gold at a single quoted price. | Gold Fixing is a price setting mechanism that allows investors to buy and sell gold at a single quoted price. |
| Barclays joined the mechanism in 2004. The other members are HSBC, Societe Generale and Scotiabank. Deutsche Bank was part of the group but has since left. |