The Financial Conduct Authority has fined Barclays Bank £26,033,500 for failing to adequately manage conflicts of interest between itself and its customers as well as systems and controls failings, in relation to the Gold Fixing.
The regulator says that these failures continued from 2004 to 2013, nearly a 10 year period.
The FCA said that on 28 June 2012, former Barclays trader Daniel James 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.
As a result of Mr Plunkett's actions, Barclays was not obligated to make a US$3.9m payment to its customer, although it later compensated the customer in full. Mr Plunkett's actions boosted his own trading book by US$1.75m (excluding hedging). The FCA has fined Mr Plunkett £95,600 and banned him from performing any function in relation to any regulated activity.
Tracey McDermott, the FCA's director of enforcement and financial crime, 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."
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Since joining the Gold Fixing on 7 June 2004, Barclays has contributed to setting the price of gold in the Gold Fixing. The FCA says that Gold Fixing is an important price-setting mechanism which provides market users with the opportunity to buy and sell gold at a single quoted price.
Mr Plunkett was a director on the Precious Metals Desk at Barclays and was responsible for pricing products linked to the price of precious metals and managing Barclays' risk exposure to those products.
The FCA has fined Barclays because it breached Principles 3 and 8 of the FCA's Principles for Businesses, in relation to the Gold Fixing. Between 7 June 2004 and 21 March 2013, Barclays breached Principle 3 by failing to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.
Barclays and Mr Plunkett agreed to settle at an early stage, qualifying for a 30% discount to their respective fines. Without this, Barclays' fine would have been £37,190,800 and Plunkett's fine would have been £136,600.