Barclays to Supply Trader Phone Calls and Bonus Data in Lawsuit

(Bloomberg) -- Barclays Plc will turn over former traders’ phone calls and bonus data in a lawsuit filed by a hedge fund over alleged market abuse in the copper market.

Red Kite Management Ltd. will receive audio from more than 40 individuals who worked at Barclays this week as part of its $850 million claim, lawyers for the fund said in a London court Friday. But the $2 billion hedge fund failed to obtain recordings of calls between Barclays and the London Metal Exchange concerning market activity around the close of trading sessions.

Founded by Michael Farmer and David Lilley, Red Kite alleges that Barclays allowed staff to share confidential information about its positions with the bank’s proprietary traders on the floor of the LME. The lawsuit could lead to closer scrutiny of how prices are set on the exchange, the global hub of industrial metals trading.

Barclays has denied all the claims, saying that it had neither obtained nor mishandled Red Kite’s confidential information. Officials at the London-based bank declined to comment on the case Monday.

In written submissions, Red Kite’s lawyers disclosed an email where a member of Barclays compliance team said that the LME "are certainly quick to call us up when there’s a sniff of activity near the close."

The fund has alleged that a practice known as "ramping" took place in 2010, where copper contracts were bid up so that the closing valuations appeared higher than they would have otherwise, according to the fund’s lawyer, Alain Choo-Choy.

Red Kite won an order Friday that Barclays should search for documents on bonuses and performance appraisals that it says would show how "large and risky trading positions" were internally assessed and justified by the bank.

Barclays withdrew from the LME’s trading floor in 2012.

The fund had asked a judge to preserve all audio data across the lender globally in case it needed to make further requests.

Barclays had been reluctant to search recordings of telephone calls, because it knew that "time and again, the misconduct of their personnel" had been uncovered by the audio, Choo-Choy said.

The lender has preserved some seven hours of data for each of its traders for each working day, Choo-Choy said in his submissions.

The trial is slated for early 2020.

The case is Red Kite Management Ltd. v. Barclays Bank Plc, High Court of Justice Queen’s Bench Division, CL-2016-000408

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