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<p>[QUOTE=&quot;PeacePeople, post: 1927043, member: 20082&quot;]<a href="http://money.cnn.com/2014/05/23/investing/barclays-gold-rigging/index.html?hpt=hp_t3" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://money.cnn.com/2014/05/23/investing/barclays-gold-rigging/index.html?hpt=hp_t3" rel="nofollow">http://money.cnn.com/2014/05/23/investing/barclays-gold-rigging/index.html?hpt=hp_t3</a></p><p><br /></p><p>The guy who tried to rig gold prices and cost his bank $44 million</p><p><br /></p><p>It was all over in 10 minutes, but it cost Barclays nearly $44 million and landed another blow to the giant bank&#039;s reputation.</p><p>Nearly two years ago, a Barclays trader took advantage of weak internal controls in a bid to rig the price of gold and profit at a customer&#039;s expense.</p><p>On Friday, Barclays (BCS) was fined £26 million, or nearly $44 million, by British regulators. Public documents lay out how the trader was able to slip through the bank&#039;s oversight.</p><p>Related: Barclays to shed 19,000 jobs</p><p>The story begins on June 27, 2012. It was already a lousy day in the history of Barclays. The U.K. banking icon had been exposed for trying to manipulate global interest rates and fined $453 million.</p><p>Separately, gold trader Daniel Plunkett stood to lose heavily on a single trade.</p><p>A client of his had staked about $43 million on a two-year bet that the price of gold would rise.</p><p>Plunkett was on the other side of that bet: If gold prices rose, he would lose money.</p><p>The contract for the trade was based on the London Gold Fixing -- a benchmark price set by a group of banks, including Barclays, in a process that dates back to 1919.</p><p>If gold was &quot;fixed&quot; above $1,558.96 an ounce on June 28, the bank would have to pay $3.9 million and Plunkett&#039;s trading book would take a hit.</p><p>On June 27, gold was fixed at $1,573.50. And worse, future prices were trading higher that evening.</p><p>So Plunkett emailed the metals trading desk at Barclays to tell them he was hoping for a &quot;mini puke&quot; -- or fall -- in the price the following day.</p><p>&quot;Hopefully we fix 1,558, or 1,558.75 ideal,&quot; he repeated to a colleague early on June 28, regulators said.</p><p>At the time, Barclays&#039; systems were unable to spot such attempts to manipulate benchmark prices. It couldn&#039;t properly manage the conflict of interest between being part of the price-setting club and selling products dependent on those prices.</p><p>It was a weakness Plunkett was able to exploit.</p><p>The Gold Fixing began as usual at 3 pm. Deutsche Bank (DB), HSBC (HBCYF), Scotiabank and Societe Generale (SCGLF) joined Barclays on a conference call.</p><p>After a few minutes weighing up buying and selling interest, the group came up with a proposed &quot;fix&quot; of $1,558.50.</p><p>But the balance swung in favor of buyers, so Plunkett jumped in with a sell order for 60,000 ounces (worth about $90 million) in the hope of preventing a price rise.</p><p>At 3:10 pm the &quot;fix&quot; was done at $1,558.50, letting Barclays off the hook and boosting Plunkett&#039;s trading book by $1.75 million.</p><p>Plunkett&#039;s victory was short-lived. The customer demanded an explanation almost immediately, and after an investigation, Barclays made good on the trade.</p><p>&quot;We very much regret the situation that led to this settlement,&quot; said Barclays CEO Antony Jenkins. The bank has worked hard to improve systems and controls, and was committed to the &quot;highest standards,&quot; he added.</p><p>Plunkett was fined £96,500 and banned from trading.[/QUOTE]</p><p><br /></p>

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