Release Date: 23rd May 2014
To access the original FCA document, click here.
Summary
The Financial Conduct Authority (FCA) has imposed a fine of £26,033,500 on Barclays Bank Plc for failing to manage conflicts of interest and inadequate systems and controls in relation to the Gold Fixing between 2004 and 2013. This punitive action follows revelations of manipulation by former Barclays trader Daniel James Plunkett, who on 28 June 2012, exploited system weaknesses to influence the 3:00 p.m. Gold Fixing in his favor, resulting in a failure to pay US$3.9 million to a customer. Although Barclays later compensated the customer, the incident highlights significant oversight failures.
Plunkett, directly responsible for pricing and managing risks on products linked to gold prices, acted to ensure the gold price was fixed below a specific threshold, benefiting his trading position by approximately US$1.75 million. His actions, which prioritised personal gain over customer interests, also impacted the integrity of the broader financial markets. Consequently, Plunkett has been fined £95,600 and received a ban from any regulated financial activities.
These events underscore Barclays’ breaches of the FCA’s Principles for Businesses, specifically Principle 3 (management and control) and Principle 8 (conflicts of interest). The bank’s failure to implement adequate policies, training, and monitoring systems facilitated inappropriate trader conduct during the Gold Fixing process. This not only increased the risk of misconduct but also contributed to the potential manipulation of a crucial financial benchmark.
Key takeaways for other firms from this case include the imperative need to establish robust controls and transparent procedures, especially concerning participation in price-setting mechanisms like the Gold Fixing. Firms must also ensure comprehensive training for staff involved in sensitive trading activities to prevent conflicts of interest and preserve market integrity.
The FCA’s stern response to these failings is a clear signal to the financial services industry about the serious consequences of neglecting proper market conduct standards. Firms are expected to rigorously assess their benchmark operations and manage conflicts of interest diligently to avoid similar punitive repercussions.
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