Hedge fund king sues Barclays over £650m ‘rigging’

A hedge fund king dubbed Mr Copper, who is one of the largest donors to the Conservative party, is suing Barclays for £650 million.

Michael Farmer, who with David Lilley runs Red Kite Management, alleges that market abuse by the bank cost his firm at least $850 million (£645 million) between 2010 and 2013.

The lawsuit is just the latest issue to cloud Barclays, which is also fending off a £1 billion claim from Middle East deal-maker Amanda Staveley, who believes she is owed fees for arranging an emergency cash call by Qatar in 2008.

Red Kite, one of the biggest metals traders in the world, claims Barclays told its own traders price-sensitive information about the funds’ positions in the copper market. Barclays bet against Red Kite, manipulating prices on the London Metal Exchange in the process, claims the hedge fund.

The bank denies wrongdoing, insisting it did not mishandle confidential information. The case is likely to drag on for some time.

Lord Farmer, a committed Christian, once said that we “live in a cursed world, cursed by God”. He gave the Conservative party £2.3 million in the run up to the 2010 general election.

In 2011, Red Kite took on Barclays in the copper market and won handsomely, a bet that became famous in metal-trading circles. Barclays Capital was betting copper prices would rise — Red Kite thought otherwise and was proved correct.

That led to a shake-up of Barclays’ metal-trading desk and enhanced Farmer’s reputation. Now he says Barclays, which managed Red Kite’s trading account, could see its positions and bet against it, even circulating details of its trades in a daily email.

Barclays faces some heavy courtroom exposure for other issues. The bank and four former top bosses, including ex-chief executive John Varley, face criminal charges over the Qatar matter.

The Serious Fraud Office alleges Barclays provided “unlawful financial assistance” to secure the Qatar loan. The bank and the individuals deny wrongdoing.

Farmer has defended his donations to the Tory party, saying “You can call me a City fat cat if you want but I’m not giving away my hard-earned money for fun.” His court claim, first reported by Bloomberg, says that Barclays “sought to manipulate the LME by ramping prices”.

The LME did not comment on the case, but said “anyone found in breach of LME rules could be subject to disciplinary proceedings”.

Barclays is awaiting the outcome of a regulatory probe into chief executive Jes Staley’s attempt to undercover the identity of a whistleblower.