23 May 2014

Barclays Fined For Brazenly Manipulating the Price of Gold With the 'Dr. Evil Strategy'

“The whole purpose of propaganda is to make the obvious seem obscure, or offensive.”

Stefan Molyneux

In this case action was taken because a large option customer complained to Barclays, which in turn gave the trader up to the FSA. And so Barclays threw one of their traders to the regulators.

Reform will come when the regulators proactively take action on such obvious market rigging maneuvers and establish sound price discovery and fair markets as they are charged to do by law.

These types of trading gambits are relatively easy to spot on the tape, and have been happening with some regularity on the Comex, in addition to the London markets. As in the case of Barclays, these short term manipulations are done to game the markets and cheat customers, who may have options positions and stop loss orders. They are theft, pure and simple, and it is being done in clear sight.

When some analysts and commenters say that they have never seen any evidence of price manipulation like this, both up and down, as large amounts of contracts are wantonly dumped or bought in quiet markets, they say more about themselves, with regard to either their expertise or integrity, than about the markets.  

Financial Times
Barclays hit with £26m fine over gold fix
By Andy Sharman
May 23, 2014

Barclays has been hit with a £26m fine after one of its traders manipulated the setting of the price of gold in order to avoid paying out on a client order.

The UK Financial Conduct Authority on Friday said it was imposing the penalty on the British lender after the trader, Daniel James Plunkett, sent out a burst of orders aimed at moving the price of the yellow metal. The behaviour occurred just a day after the bank paid £290m in penalties and became the first institution to be fined in the sweeping Libor and Euribor rate-rigging probes...

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...

Read the entire article here.

Related: Barclays Fined For Manipulating Price of Gold For a Decade