Barclays Fined For Manipulating Price Of Gold For A Decade; Sending “Bursts” Of Sell Orders

You can bet that it wasn’t just Mr Plunkett but he’s the latest scapegoat, courtesy of ZeroHedge:

It was almost inevitable: a week after we wrote “From Rothschild To Koch Industries: Meet The People Who “Fix” The Price Of Gold” and days after “Barclays’ Head Of Gold Trading, And Gold “Fixer”, Is Leaving The Bank”, earlier today the UK Financial Conduct Authority finally formalized what most in the “tin-foil” hat community had known for years, when it announced that it fined Barclays £26 million for manipulating “the setting of the price of gold in order to avoid paying out on a client order.” Furthermore, the FCA confirmed that those inexplicable gold raids which come as if out of nowhere, and slam gold with a vicious force so strong sometime they halt the entire market, had a very specific source: Barclays, whose trader Daniel James Plunkett, born 1976, “sent out a burst of orders aimed at moving the price of the yellow metal.”

This took place for a decade. As the FT reports:

The FCA said Barclays had failed to “adequately manage conflicts of interest between itself and its customers as well as systems and controls failings, in relation to the gold fixing” between 2004 and 2013.

Some further details on Plunkett’s preferred means of manipulating the gold price.

The FCA said Mr Plunkett had manipulated the market by placing, withdrawing and re-placing a large sell order for between 40,000 oz and 60,000 oz of gold bars.

He did this in an attempt to pull off a “mini puke”, which the FCA took to mean a sharp fall in the price of gold. As a result, the bank was not obliged to make a $3.9m payment to the customer under an option contract.

Which is precisely what we have shown many times here for example in “Vicious Gold Slamdown Breaks Gold Market For 20 Seconds”, when a sell order so aggressive comes in it not only takes out the entire bid stack with an intent not for “best execution” but solely to reprice the market lower. Recall from September: Continue reading

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Barclays to create bad bank

Courtesy of The FT:

Barclays will next week announce the creation of a bad bank in a bid to transform its struggling investment banking operations, which were dealt a further blow on Tuesday with the departure of the highly regarded head of its US business.

The move to exit parts of its shrinking fixed income business and its lossmaking European branch network will be announced as part of next week’s strategic update to investors, according to people familiar with the plan. The internal bad bank will be run by Eric Bommensath, the co-head of its investment bank.

The news comes as fears intensify that the departure of Skip McGee as head of Barclays Americas will trigger an exodus of bankers acquired when the UK bank took over Lehman Brothers’ US operations during the financial crisis.

Analysts and rival bankers said his departure was a blow for Antony Jenkins, chief executive, who defended last year’s higher bonus pool in spite of falling profits as necessary to avoid a “death spiral” of bankers quitting to seek a bigger pay cheque.

The bank said Mr McGee’s departure was a result of the vast regulatory burden it faces in the US. The Texas-born dealmaker was part of the Lehman team that negotiated the sale of its US operations to Barclays in 2008 and he has been seen as pivotal in holding together the business.

Mr McGee, 54, is being replaced as head of Barclays Americas on Thursday by Joe Gold, its global head of client capital management, who the UK bank hired out of the ashes of the failed Enron energy trading empire 12 years ago.

Barclays has been under pressure from investors to cut costs and rein in pay levels while coming up with a more coherent strategy for its investment bank, which is failing to generate returns above its cost of capital. Continue reading

Slump in debt trading sends shockwaves across City firms

Courtesy of City AM:

BANK shares fell yesterday as fears mounted that global bond trading is facing a prolonged decline, after Deutsche Bank swung to a surprise loss in the final quarter of 2013.

The German lender joined Goldman Sachs and Citigroup, who last week reported weak fixed income trading revenues.

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Deutsche Bank’s shares dived another 5.4 per cent, and sent shockwaves through markets – other firms heavily involved in fixed income also saw their stock fall.

Icap’s shares dived 4.31 per cent, while fellow broker Tullett Prebon’s edged down 0.85 per cent.

Barclays saw its shares dip 2.01 per cent and RBS fell 1.29 per cent – it still has bond market exposures despite slimming its investment arm. Continue reading