23rd May 2014 08:57
LONDON (Alliance News) - Barclays PLC was Friday fined GBP26.0 million by UK regulators for failings surrounding the London Gold Fixing, while one of its former traders has been banned for trying to influence the price-setting process just one day after the bank was fined for its role in the London interbank offer rate (LIBOR) rigging scandal.
In a statement, the Financial Conduct Authority said it imposed the fine on Barclays for failing to manage conflicts of interest between itself and its customers, as well as systems and controls failings, in relation to the London Gold Fixing.
The failings continued from 2004 until 2013, the FCA said, adding that Barclays received a 30% discount on its fine because it agreed to settle at an early stage. Without that discount, Barclays would have been fined GBP37.2 million.
Barclays is one of four fixing members, alongside HSBC Holdings PLC, Bank of Nova Scotia Mocatta and Societe Generale.
The FCA said that Daniel Plunkett, a former Barclays trader, exploited weaknesses in the bank's systems and controls to seek to influence the afternoon gold fixing on June 28, 2012 and profited at a customer's expense in the process. As a result of Plunkett's actions, which boosted his own trading book by USD1.75 million excluding hedging, the customer missed out on a USD3.9 million payment. Barclays later compensated the customer in full.
Plunkett, who also qualified for a 30% discount, was fined GBP95,600 and banned from conducting regulated financial services activities.
Plunkett was a director on Barclays' precious metals desk and was responsible for pricing products linked to the price of precious metals and managing Barclays' risk exposure to those products. The FCA said his misconduct is particularly serious because he put his interests over those of a customer. The regulator said his actions had the potential to have an adverse effect on the gold fixing and the UK and international financial markets.
"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," Tracey McDermott, the FCA's director of enforcement and financial crime, said in a statement. "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 said Barclays' failure to identify and manage the risks in its business was extremely disappointing, and noted that Plunkett's actions came the day after the FCA fined Barclays GBP59.5 million for misconduct relating to the LIBOR and EURIBOR benchmark rate-rigging scandal, part of GBP290 million in fines the bank was handed by US and UK regulators.
"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," McDermott said.
Barclays joined the gold fixing on June 7, 2004. The fixing is an important price-setting mechanism which provides market users with the opportunity to buy and sell gold at a single quoted price.
Barclays Chief Executive Antony Jenkins said in a statement Thursday the bank regrets the situation that led to the settlement.
"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. While there is much more to do to achieve the deep-rooted cultural change we embarked upon at the start of 2013, Barclays today has significantly changed for the better," Jenkins said.
Barclays said that the FCA has acknowledged that Barclays brought the conduct of the former trader promptly to the attention of its predecessor, the Financial Services Authority, and that Barclays also fully co-operated with the FCA?s investigation.
Barclays shares were Friday quoted at 245.30 pence, up 0.8%.
By Samuel Agini; [email protected]; @samuelagini
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