Friday, 23 May 2014

Barclays is in the doghouse again

Gold fixing, this time. Here's the FCA's summary:
The Financial Conduct Authority (FCA) has fined Barclays Bank plc (Barclays) £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. These failures continued from 2004 to 2013.
It seems to have been a rogue trader, one Daniel Plunkett, who rigged the 3 pm Gold Fixing to avoid making a payment to a customer. He has been fined as well and struck off by the FCA.

But the timing is exquisite.  The very day after Barclays was censured by the FCA for rigging Libor and Euribor, Plunkett rigged the gold fixing in his favour. Clearly nothing had been learned from the FCA's enforcement action. This is worrying, given the high profile of the FCA's investigation into Libor-rigging at Barclays, and the fact that it cost the bank its CEO as well as regulatory fines and untold reputational damage.

It's also implied in the FCA's notice that although Plunkett's misconduct is recent, Barclays' systems and controls around its participation in the Gold Fixing have been inadequate for a very long time. It seems likely therefore that Barclays traders have routinely rigged the Gold Fixing.

Although the specific incident referred to by the FCA occurred in 2012, the fact that failures continued into 2013 is of course highly embarrassing for Anthony Jenkins, who is trying desperately to clean up the bank's image.  Clearly he didn't act fast enough to address systems and control failures on the trading floor.

Barclays is the first bank to be fined for rigging the Gold Fixing. But I doubt if it will be the last. The other banks involved in the Gold Fixing, namely Scotiabank, Societe Generale and HSBC - and Deutsche Bank, although it has now exited the Gold Fixing - are under investigation for the same thing. It's evident that price rigging has been common practice across all markets, so it seems unlikely that Barclays will be the only offender, and it may not even be the worst.

And roll on the next scandal, too. Fraud, price fixing and ripping off customers seem to be endemic not only on trading floors, but in retail banks and even private banks. It seems that we are gradually dismantling the entire ethos of late 20th Century banking. I wonder what the eventual cost will be....


Related reading:

That Barclays Libor-rigging matter....

4 comments:

  1. So was this just a case of a single rogue trader who went off the reservation and Barclays weak internal controls didn't pick it up? Or was it wider than that?. Also you'd have thought that something like that should be a criminal offence. Is the action not criminal? Or is it that there was enough evidence to impose a presumably civil penalty but not enough to justify a criminal prosecution?

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    1. Tim,

      if it's like previous "rigging" scandals, the individual(s) concerned are initially fined and censured by the FCA, and a criminal prosecution may follow if the FCA considers that there is enough evidence to involve the Serious Fraud Office. I don't yet know if they are doing that in this case.

      The FCA only talks about a single rogue trader. But they also say that Barclays' reporting was so poor that it is impossible to tell whether there were more instances.

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  2. Well many senior politicians get good campaign funding and put-out-to-grass jobs from Banksters so why would they classify such stealing as criminal offences?

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  3. it is the good information of the financial system....thank you for sharing..

    FCA regulation| FCA application

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