Barclays Bank Plc

1. On 23 May 2014, the FCA imposed a penalty of £26,033,500 on Barclays Bank PLC (Barclays) for breaches of Principles 3 and 8, for failing to manage conflicts of interest, as well as systems and controls failings in relation to the London Gold Fixing. Were it not for the Stage 1 settlement discount, the penalty would have been £37,190,800. Conflicts of Interest 2. Between 7 June 2004 and 21 March 2013 (Relevant Period), Barclays breached Principle 8 by failing to adequately manage certain conflicts of interest between itself and its customers. In particular, Barclays failed to adequately manage the inherent conflict of interest that existed from (i) Barclays participating in the Gold Fixing and contributing to the price fixed during the Gold Fixing, while at the same time also (ii) selling to customers options products that referenced, and were dependent on, the price of gold fixed in the Gold Fixing, by not putting in place policies, procedures, systems and training in relation to the Gold Fixing which would have adequately enabled its staff to properly identify and manage the risks arising from this inherent conflict of interest. 3. Barclays' lack of specific training and guidance, given the absence of clear and sufficiently-tailored policies and procedures with respect to the Gold Fixing, meant that Barclays' personnel (including supervisors) may have been unaware of which conflicts of interest they should pay particular attention to in relation to the Gold Fixing. 4. On 28 June 2012 the risk created by Barclays' failure to adequately manage the inherent conflict of interest was realised when a Barclays trader participated actively in the 3:00 p.m. Gold Fixing even though he was responsible for risk-managing an options contract that was dependent on the price of gold fixed in that Gold Fixing. The Barclays trader placed orders with intention of increasing the likelihood that the price of gold would fix below a certain level, preferring his interests over those of a customer. Systems and controls failings 5. For the following reasons, Barclays breached Principle 3 by failing to take reasonable care to organise and control its affairs responsibly and effectively with adequate risk management systems in relation to the London Gold Fixing process: (i) During the Relevant Period Barclays failed to create or implement adequate policies or procedures to properly manage the way in which Barclays' traders participated in the Gold Fixing; (ii) During the Relevant Period Barclays failed to provide adequate specific training to Precious Metals Desk staff in relation to their participation in the Gold Fixing; and (iii) During the Relevant Period Barclays failed to create systems and reports that allowed for adequate monitoring of its traders' activity in connection with the Gold Fixing. The systems and reports did not formally record orders placed by traders in the Gold Fixing until 5 February 2013 and did not identify Gold Fixing transactions separately from general gold spot trades until 21 March 2013.