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

Tyler Durden's picture

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:

There was a time when, if selling a sizable amount of a security, one tried to get the best execution price and not alert the buyers comprising the bid stack that there is (substantial) volume for sale. Of course, there was and always has been a time when one tried to manipulate prices by slamming the bid until it was fully taken out, usually just before close of trading, an illegal practice known as "banging the close." It appears that when it comes to gold, the former is long gone history, and the latter is perfectly legal. As the two charts below from Nanex demonstrate, overnight just before 3 am Eastern, a block of just 2000 GC gold futures contracts slammed the price of gold, on no news as usual, sending it lower by $10/oz. However, that is not new: such slamdowns happen every day in the gold market, and the CFTC constantly turns a blind eye. What was different about last night's slam however, is that this time whoever was doing the forced, manipulation selling, just happened to also break the market. Indeed: following the hit, the entire gold market was NASDARKed for 20 seconds after a circuit breaker halted trading!

 

To summarize: a humble block of 2000 gold futs (GC) taking out the bid stack, and slamming the price of gold, managed to halt the gold market: one of the largest "asset" markets in the world in terms of total notional, for 20 seconds.

And Mr. Plunkett in action:

To be sure Barclays was truly sorry, and pinky swears that having been caught manipulating the gold market for ten years it will never do it again:

The news is also a fresh blow to Barclays’ chief executive Antony Jenkins as he tries to overhaul the culture of the London-based lender. Mr Jenkins took over 18 months ago after his predecessor, Bob Diamond, stepped down amid the Libor scandal.

 

Analysts said the fine reflected badly on the industry – as well as the hard-charging, revenue-focused business model that Barclays had previously been operating.

 

Mr Jenkins said in a statement on Friday: “We very much regret the situation that led to this settlement . . . These situations strengthen our resolve to improve.” The bank discovered the misconduct after the client complained. It then reported the incident to the regulator, for which it received a 30 per cent discount on its fine for co-operation.

 

Ian Gordon, analyst at Investec, said that in pure financial terms, the fine was “utterly inconsequential, both in a group context, and in relation to the quantum of other conduct costs”. He was referring specifically to the bank’s provisions for the mis-selling of payment protection insurance and interest rate hedging products

So a wrist slap, we get that. One wouldn't expect more - after all the banks run the show.  And yet, one wonders: is this just a case of "Fab Tourre-ing" the scandal, and redirecting all attention to just one (preferably junior) person? To be sure, this one trader made handsome profits from gold manipulation...

Mr Plunkett boosted his trading book by $1.8m at the expense of a customer, who was later compensated. He has now been banned from “performing any function in relation to any regulated activity” and fined £95,600. At the time, Barclays was one of five banks that set the price of the precious metal twice a day. 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.”

... but is this just an attempt by the FCA to pass this off as the proverbial "only cockroach", especially when as we reported earlier this week, none other than Barclays head of trading Marc Booker quietly left dodge?

The speculation is further heightened when one considers that Plunkett had left Barclays nearly two years ago in October 2012! According to his FCA record:

Prior to Barclays Plunkett worked as a lowly junior trader at Dresdner and RBC - and this is the a manipulation mastermind? Further, considering the FCA found failures at Barclays starting in 2004 and Plunkett only joined in 2006, can the FCA please disclose who else was the frontman for gold manipulation at Barclays in the 2004-2006 period? 

This is what the FCA had to say on the matter of young master Plunkett:

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.

 

Plunkett was responsible for pricing and managing Barclays' risk on a digital exotic options contract (the Digital) that referenced the price of gold during the 3:00 p.m. Gold Fixing on 28 June 2012. If the price fixed above US$1,558.96 (the Barrier) during the 3:00 p.m. Gold Fixing on 28 June 2012, then Barclays would be required to make a payment to its customer. But if the price fixed below the Barrier, Barclays would not have to make that payment.

 

During the 3:00 p.m. Gold Fixing on 28 June 2012, Plunkett placed certain orders with the intent of increasing the likelihood that the price of gold would fix below the Barrier, which it eventually did. As a result, Barclays was not obligated to make the US$3.9m payment to its customer, and Plunkett’s book profited by US$1.75m (excluding hedging), which was in addition to an initial profit that his book had received upon the sale of the Digital.

 

Very shortly after the conclusion of the 3:00 p.m. Gold Fixing on 28 June 2012, the customer became aware that the price had fixed just below the Barrier and sought an explanation from Barclays as to what happened in the Gold Fixing. When Barclays relayed the customer’s concerns to Plunkett on 28 and 29 June 2012, he failed to disclose that he had placed orders and traded during the Gold Fixing. Further, Plunkett misled both Barclays and the FCA by providing an account of events that was untruthful.

 

Plunkett’s misconduct is particularly serious because he preferred his interests over those of a customer and his actions had the potential to have an adverse effect on the Gold Fixing and the UK and international financial markets.

It would appear that Plunkett is indeed nothing more than another instance of "Kerviel" or "Tourre" - an irrelevant mid-level trader thrown at the wolves of public consumption just so the attention can be redirected from the real manipulation elsewhere, and much higher up.

This is hardly surprising, as we noted three days ago when we wrote about the Barclays head gold trader termination:

"Bottom line: just like the Silver Fixing which last week announced its winddown, the days of the 117-year-old Gold fix are numbered. But to preserve continuity of riggedness and manipulation, perhaps they can just outsource their job duties to the biggest manipulators of all: Bank of England, the Fed and, of course, the BIS."

So yes: it is now a fact that gold is manipulated by various commercial banks, and that those gold "raids" one sees every morning usually around the time of the London fix aren't accidental at all but are entirely designed to reprice the market, but how deeper does the rabbit hole go?

[FCA Director Tracy] McDermott added: “Firms should be in no doubt that the spotlight will remain on wholesale conduct and we will hold them to account if they fail to meet our standards.”

Alas, this is a lie - by handing Plunkett to the public on a silver platter, it simply means that the far bigger and more important players in the gold manipulation market - stretching all the way to central bank and, of course, bank of central bank level, will simply be allowed to continue business "as usual."

So for those who want the real people behind the real manipulation before they all scatter into the dust, we urge you to reread "From Rothschild To Koch Industries: Meet The People Who "Fix" The Price Of Gold." Because the gold manipulation rabbit hole goes far, far deeper than just one single, solitary trader...

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jubber's picture

So how many years was Mr Plukett sent to Jail for?  Oh Zero

Sudden Debt's picture

those slaps on the wrist really hurt when your silverspoonfed you know...

GetZeeGold's picture

 

 

Manipulating Price Of Gold For A Decade 

 

For a decade......sounds about right.

jaap's picture

So this is a guy who has done something proven illegal which costed me money? Is a class suit possible for liability?

Dr Benway's picture

The criminals control the courts, and can conjure unlimited amounts of money out of thin air. Good luck with that lawsuit.

 

http://drbenway.blogspot.com/ncr

insanelysane's picture

Reading Dicken's Bleak House at the moment and nothing has change in 200 years of these "judicial" systems.

Dr Benway's picture

"But injustice breeds injustice; the fighting with shadows and being defeated by them necessitates the setting up of substances to combat."

NoDebt's picture

So he did this at Barclays for 10 years even though he wasn't at Barclays for 10 years.  That dude is GOOD.

Mister Ponzi's picture

And just on that day at 8:20 EST it is happening again...

outamyeffinway's picture

But no more 3:00 am smack downs?

doomandbloom's picture

I want to buy tickets to Mr Plunketts talk on Commodities Markets ....i am ready to pay £200

Pinto Currency's picture

 

Selling orders in bursts is one issue but not the central issue.

The LBMA sees trading of up to 8,500 tonnes of gold per day vs global mine production of 10 tonnes per day.

They are not trading gold but unbacked virtual gold instruments that can be created without limit.

The gold price created by London and NY trading is a fiction.

But that will not be said.

See:

http://www.goldcore.com/goldcore_blog/london-bullion-market-association-june-clearing-turnover-statistics

CheapBastard's picture

Let me guess....no jail time for anyone, right?

Theosebes Goodfellow's picture

And what's with just £26 million? For 10 YEARS? How about £26 million for every year? How about a minimum sentence of jail for a year for each year? The number of victims they had is unimaginable.

Pinto Currency's picture

 

Rigging gold rigs interest rates because gold can't respond to monetary inflation by central banks.

We now have a $200 trillion global debt bubble.

Everyone is impacted not just gold traders.

Create ficticious gold prices through virtual gold trading and you create ficticious interest rates.

 

BaBaBouy's picture

"""Sending "Bursts" Of Sell Orders"""

Isn't That Just A NORMAL DAY In The Life Of The INTERNATIONAL GOLD "FIXING" BUSINESS ?????

Pinto Currency's picture

 

The Bank of England and the BIS are at the center of gold manipulaton not some trader named Plunkett.

 

BaBaBouy's picture

MEANWHILE Back In GERMANY...

Another 14 Ozs Physical Just Showed Up In A Shipment From The FED...

Germany Should Have 30% Of Their Physical GOLD Back In About??? 2000 Years Hahahaha

macholatte's picture

 

 

As always, Mr. Plunkett, should you or any of your IM force be caught or killed, the Secretary will disavow any knowledge of your actions. Good luck, Dan. This tape will self-destruct in five seconds.

 

 

Bay of Pigs's picture

Don't forget the William Dudley at the helm of the ship over at the NYFED and his role at the BIS.

"In 2012, Mr. Dudley was appointed chairman of the Committee on the Global Financial System of the Bank for International Settlements (BIS). Previously, Mr. Dudley served as chairman of the Committee on Payment and Settlement Systems of the BIS from 2009 to 2012."

http://www.newyorkfed.org/aboutthefed/orgchart/dudley.html

Never One Roach's picture

 

 

 

Only the little peeples are sent to jail.

That's the Law.

Four chan's picture

"systems and controls failings" every week for decades lol @ the balls on these criminals.

gh0atrider's picture

Let me guess....no jail time for anyone, right?

Who cares?  Let them live and we will hunt them down after the collapse.  You can only hide in a cave for so long.

Tabarnaque's picture

So much for Traitor Dan who foolishly affirmed over the last few years that the price of gold was NOT manipulated. I wonder how much the power that be pays him.

kchrisc's picture

"Let me guess....no jail time for anyone, right?"

Only jail-time for those not from Ashkenazi. Like at SAC.

Save_America1st's picture

So Plunket's managers told him to do something illegal which he more than happily did for them because he thought he was then going to become an immortal, untouchable "bankster", but since the customer was more than aware something fishy was going on and called Barclays out on it they then threw their fish/puppet, Mr. Plunket, under the bus.

He no longer gets to be a bankster gangster but he also avoids jail time and only minimal fines are levied all around.

Oh...and I'm sure he's sworn to shut the fuck up about it too and will happily do so in order to avoid the certain nail-gunning or car bombing he was assured that he would experience otherwise. 

 

Mercuryquicksilver's picture

On one hand it's too bad there wasnt a nail gun around. On the other I'd like to buy Plunket a drink to thank him for providing me a discount.

 

Only stupid criminals get caught. Give me a good algorithm with code and I'm certain I could slam gold futures without being noticed.  And..... I'm sure its still going on today.

effing idiot's picture

Commods are zero sum game - these contracts either have to be bought back before expiration or metals delivered. If you just sell huge blocks all at once and buy back slowly is the net effect of that a lower price? And just keep doing that over and over..Is that what the big boys do all the time in all commods? Reverse that for a commod trending up? What am I missing?

Badabing's picture

ha ha LOL metals deliverd make me piss my pants.

its paper delivered at a loss! what do you think QE is for idiot,

topshelfstuff's picture

why would anyone look at the Puppet, It was Barclays (Britain), actually Barclays real Owners

its sad but few understand the role that Britain has, listen to this

 

https://www.youtube.com/watch?v=fj47ycdsTw0

eclectic syncretist's picture

This scapegoat fall-guy bullshit is pathetic work by the banksters. One guy at Barclays has been manipulating the physical gold price down for the past decade??? China and Russia thank you I'm sure you stupid bastards, for continuing to provide them physical at bargain basement prices. Meanwhile the continued fucking you are administering to Americans via the eventual severe devaluation of the dollar is duly noted on the pages of zero hedge.

SoilMyselfRotten's picture

Barclays failed to adequately manage conflicts of interest....

 

Lets put lipstick on the pig...its called stealing!

Manthong's picture

“UK Financial Conduct Authority”

..is that anything like the Guantanamo Civil Rights Commission?

pmbug's picture

I have to say that I am terribly, horribly shocked to hear this news.  Not that the manipulation occurred, but that some government entity actually confirmed it.  Someone didn't get the memo I'd guess.

Jaspergers's picture

Plunkett, Liesman, Madoff, etc... why do so many people's last names give away what they do?

SoilMyselfRotten's picture

Why didn't they release this article before Tuesdays 4300 gold contract slamdown? Of course now that its out, they'll take another look at that transaction. NOT

Four chan's picture

its a crewel joke on he miners of gold and the american people who worked their lives away for it only to have it confiscated by these same bankers in 1933. bringing an end to te republic and enslavement by the tribe.

PeakOil's picture

One guy at Barclays?? Pfttt... yeah right.

Alternatively, this is just another case of putting lipstick on the fiat pig.

Central. Bank. Policy. Been that way forever!

Cathartes Aura's picture

but ya gots to have yer Figureheads to Hate, yah?

it's the polar opposite meme to the Figureheads to Vote for.

and yes, it's

Been that way forever!

and obviously it's still working, for Them.

JLee2027's picture

I would think about the 10th or 1000th time the same sell order came in, from the same source, and was withdrawn after crushing the price, that an honest market would have stopped this crap in a heartbeat. Either take away their licenses, put code in place to ignore the order when it appears, make a few phone calls, or require the order to actually be processed and refuse the withdraw.

My point being, it's not just one guy at one firm. All the larger market participants, and the market itself had to know this was happening and allowed it.

Cacete de Ouro's picture

So what happened to the BaFin investigation of Deutsche?
Defector Matt Keen, stayer James Vorley and defector Kevin Todger Rodgers?

jerry_theking_lawler's picture

So, I'm not a huge fan of A. Rand, however, she may have been onto something in her novels....just walk away from the system.....that is our only choice. 'They' control everything except us....we control ourselves. Just walk away.

lunaticfringe's picture

I AM a huge fan of A. Rand. One of the first people to realize where this greedy, collectivist society would end up. Her visions all coming true. Like Nostra fucking damus.

Not My Real Name's picture

Agreed. Atlas Shrugged should be mandatory reading for every high schooler. Of course, considering the collectivists who run the schools, it never will be -- which is why my kids will be reading the book at home before they leave the nest. 

prains's picture

Rand spent her entire intellectual life trying to figure out how she could suck her own balls......wait, that doesn't make sense on so many levels.....but it does....that's the randian dialectic....she tricked you all into wanting to suck your own balls TOO!

 

suckers!!!!

Elliott Eldrich's picture

Did you know that Ms. Rand was also a big admirer of serial killer William Edward Hickman, who sadistically dismembered 12-year old Marion Parker in 1927? She wrote "Other people do not exist for him, and he does not see why they should," and that he had "no regard whatsoever for all that society holds sacred, and with a consciousness all his own. He has the true, innate psychology of a Superman. He can never realize and feel 'other people.'" 

Ayn Rand was a miserable and wretched creature who admired murderers and had nothing but disdain for those who cared about other people. Hardly a role model I'd want to look up to. You can read more about her crush on Hickman here...

http://www.alternet.org/story/145819/ayn_rand,_hugely_popular_author_and...

Not My Real Name's picture

Interesting. Now who said anything about her being a role model? It doesn't invalidate her spot-on warning regarding the dangers of collectivism and the statists who insist on sacrificing individualism for for the "public good".

You're not trying to infer that if Karl Marx detested murderers, then we should follow his ideology? Or are you?