Daniel James Plunkett

Published On:

Release Date: 23rd May 2014

To access the original FCA document, click here.

Summary

The Financial Conduct Authority (FCA) has fined Barclays Bank Plc £26,033,500 due to insufficient management of conflicts of interest and lapses in systems and controls related to the Gold Fixing from 2004 to 2013. This action was taken after former Barclays trader Daniel James Plunkett exploited these deficiencies on 28 June 2012, adversely affecting the integrity of the 3:00 p.m. Gold Fixing to profit at the expense of a customer. Consequently, Plunkett was fined £95,600 and banned from any regulated financial activities.

Plunkett’s manipulation prevented Barclays from making a due payment of US$3.9 million to a customer, though it was later reimbursed. His actions that day, which enriched his trading book by US$1.75 million, underscored serious misconduct as he prioritises his financial interests over those of the customer and potentially compromised the Gold Fixing process and broader financial market integrity.

The FCA identified that Barclays failed to adhere to Principle 3 of its Principles for Businesses by not organising and controlling its affairs with adequate risk management systems. Specific failures included not establishing proper policies or training for its precious metals desk staff involved in the Gold Fixing and lacking systems for monitoring traders’ activity in these operations. Furthermore, Barclays breached Principle 8 by not managing the inherent conflict of interest that arose from its simultaneous participation in setting and profiting from the Gold Fixing price.

Key lessons for other firms from this incident include the importance of robust internal controls and conflict of interest management, especially when involved in price-setting mechanisms. Firms must ensure transparent procedures and adequate training for staff to uphold market integrity and prevent similar regulatory breaches.

The FCA has stressed the need for all financial firms to rigorously evaluate their benchmark operations to prevent replication of such behaviour. The spotlight remains on wholesale conduct, with a clear warning that failure to meet standards in managing benchmarks and conflicts of interest will result in significant penalties and reputational damage. This case serves as a reminder to the financial services industry of the high costs of compliance failures, both financially and in terms of public trust.

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