The U.K.’s top financial watchdog, the Financial Conduct Authority (FCA), has fined Barclays PLC (NYSE:BCS) (LON:BARC) $43.8 million (26 million pounds) after accusing one of the bank’s former traders of improperly influencing gold prices at the expense of a customer.

Barclays Banks Barclays PLC
Barclays PLC

Officials say the trader’s gold price manipulation took place a day after U.K. and U.S. regulators fined Barclays PLC (NYSE:BCS) (LON:BARC) $450 million over attempted Libor rigging.

Barclays PLC Disregards customer’s interest?

The U.K.’s Financial Conduct Authority said Friday that the alleged manipulation of London gold prices was “extremely disappointing” and resulted from Barclays PLC (NYSE:BCS) (LON:BARC) “failing to adequately manage conflicts of interest between itself and its customers.”  The FCA said former Barclays trader Daniel James Plunkett exploited weaknesses in the bank’s systems to influence the price of gold, thus influencing the $20-trillion-a-day gold market.

In its statement, the FCA said the incident helped Barclays PLC (NYSE:BCS) (LON:BARC) avoid paying out $3.9 million to a client on a derivatives contract. Officials said the bank later compensated the customer in full. The FCA said the incident came to light only after the customer had complained to Barclays. The FCA said there were failings at Barclays starting in 2004 until 2013 but that the key event occurred on June 28, 2012, a day after U.K. and U.S. regulators fined the bank in connection with allegedly trying to rig Libor.

Besides the FCA, several other regulators, including Bafin in Germany and the U.S. Commodity Futures Trading Commission, have indicated that they also are investing the alleged gold price fix.

Barclays PLC – Effects of the Libor rigging scandal

The Libor rigging scandal has put scrutiny on how all benchmark prices are set, including London’s gold prices. Banks arrive at the fixed gold price by matching buy and sell orders during a twice-daily telephone call. Miners, jewelers, and central and commercial banks use the fixed price to trade gold.

The Libor scandal erupted a couple of years ago when Barclays PLC (NYSE:BCS) (LON:BARC) was fined £290 million by British and U.S. regulators for attempted manipulation of Libor. Last September, the National Credit Union Administration (NUCA), which regulates U.S. credit unions, filed an anti-trust lawsuit against 13 major international banks as part of the global crackdown in connection with the Libor rate-rigging scandal.

Barclays PLC – Researchers called for investigation

As reported earlier, the researchers who uncovered the Libor scandal called for an investigation of possible gold price manipulation.  Researchers Albert Metz, managing director at Moody’s Corporation Investors Service, and Rosa Abrantes-Metz, a professor at New York University’s Stern School of Business, called for an investigation of collusive behavior.  The primary issue stems from unusual trading patterns near the close of trading in London around 3 p.m. when the fix price is set on a conference call among the biggest gold dealers.