The Financial Conduct Authority (FCA) has fined Barclays £26m for failing to manage conflicts of interest between itself and its customers, as well as systems and control failings, in relation to the London Gold Fixing.
The Gold Fixing is a price-setting mechanism which gives market users the chance to buy and sell gold at a single quoted price.
The FCA said Barclays' failures ranged from 2004 to 2013 and said in a statement that former Barclays trader Daniel James Plunkett exploited weaknesses in Barclays' systems to influence that day's Gold Fixing.
As a result of Plunkett's actions, Barclays was not obligated to pay $3.9m to its customer. However, the customer was later compensated the full amount. Excluding hedging, Plunkett's own trading received a boost of $1.75m.
Plunkett himself has been fined £95,600 and is banned from performing any function in relation to any regulated activity. He was previously responsible for pricing products linked to the price of precious metals and managing Barclays' risk exposure to those products.
"A firm's lack of controls and a trader's disregard for a customer's interests have allowed the financial services industry's to be sullied again," said Tracey McDermot, director of enforcement and financial crime at the FCA.
The FCA said Barclays failed to:
1. create or implement adequate policies or procedures to properly manage the way in which Barclays’ traders participated in the Gold Fixing;
2. provide adequate specific training to precious metals desk staff in relation to their participation in the Gold Fixing; and
3. create systems and reports that allowed for adequate monitoring of traders’ activity in connection with the Gold Fixing.
Plunkett and Barclays settled at an early stage, which allowed for a 30 per cent discount on their fines.