Barclays, Red Kite settle $850 million market abuse case

Bloomberg

Red Kite, the world’s best-known metals hedge fund, reached a settlement with Barclays Plc over claims traders at the bank engaged in abusive trading and manipulated copper prices on the London Metal Exchange.
The financial terms of the agreement will not be publicly disclosed, according to a statement. Red Kite had previously said actions by Barclays traders cost it at least $850 million between 2010 and 2013.
The lawsuit has been closely watched in the metals market and legal circles. Many were awaiting the outcome of a trial scheduled for 2020, which would have pitted the commodities hedge fund against a bank that has been rocked by claims of manipulative trading spanning interest rates, currencies and precious-metal markets.
The hedge fund said that two Barclays traders, Iain Macrae and Christian Saunders, used their knowledge of Red Kite’s account with the bank to trade heavily against it. Disclosures in the lead-up to the trial revealed that Barclays suffered losses of nearly $400 million when it eventually unwound the trades built up by Macrae and Saunders during the battle with Red Kite.
The losses — some of the biggest ever disclosed by a bank in the commodities markets — were denied by Barclays at the time, with a spokeswoman saying there had been no abnormal trading in its commodities business. Macrae was fired in 2011 for “irresponsible risk taking,” while Saunders was “summarily dismissed,” Red Kite said in legal filings, citing disclosures by Barclays.
The settlement means that some of the broader allegations in the case — such as the claim that the trade-rs successfully manipulated global benchmark prices for copper, helped by traders at rival firms — will be left unexplored in court.