UK's Serious Fraud Office to launch criminal probe into forex rigging


By Harriet Dennys
The Telegraph, London
Sunday, July 20, 2014

The Serious Fraud Office is poised to launch the first criminal investigation into alleged rigging of the L3 trillion-a-day foreign exchange markets at leading City banks.

The financial watchdog is expected to announce the move as early as this week, according to reports, raising the spectre of further multimillion-pound fines for Britain's biggest banks over their behaviour during and after the financial crisis.

Investigators are expected to examine whether individual traders personally benefited by manipulating benchmark forex prices. It is claimed that traders colluded via online chatrooms in groups with names such as the Bandits' Club, the Dream Team, and the Cartel.

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The SFO's criminal inquiry into alleged currency markets rigging in London, home to more than 40 percent of the world's foreign exchange trading, will join global investigations into forex market abuse by watchdogs across Europe, Asia, and the US.

The UK's principal financial regulator, the Financial Conduct Authority, launched an investigation into global currency markets last October.

In March the Bank of England appointed Lord Grabiner QC to adjudicate on whether any bank officials were involved in manipulating the forex market between 2005 and 2013.

The SFO yesterday declined to set a date on the launch of its forex-rigging inquiry. It said in a statement: "We are receiving and examining complex data on this topic. When we open a criminal investigation, that decision will be announced in the usual way."

But Ross McEwan, the chief executive of Royal Bank of Scotland, said last Friday that he believes the forex probe could prove an even more serious problem for British banks than the Libor scandal, for which RBS last year paid a $612 million (L358 million) fine.

Asked whether the FX investigation could be a bigger problem for the industry than Libor, Mr McEwan told London's LBC radio station: "Unfortunately, it has the hallmarks."

He added: "We're still doing a lot of investigation. We're going through millions and millions of emails, chatrooms, conversations to see what actually went wrong, if anything, in this area.

"Unfortunately, I have the feeling that this is a sort of Libor case again. The difference this time is that we haven't sat back and denied it. We've gone into it and are doing the investigation hand in hand with the authorities."

The UK's so-called Big Four banks -- Lloyds, Barclays, HSBC, and RBS -- are also under pressure from the Competition and Markets Authority, which is expected to fire the starting gun on a full-blown competition inquiry into the banking sector on Friday.

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