On 21 July 2014 the director of the Serious Fraud Office formally announced the opening of a criminal investigation into allegations of fraudulent conduct in the foreign exchange market.
This investigation has been anticipated for some time and relates to the alleged rigging of the £3 trillion a day foreign exchange markets at leading City of London banks over a period of several years.
According to the Daily Telegraph:
- This investigation raises the possibility of further multi-million pound fines for Britain’s biggest banks over their behavior during and after the financial crisis.
- SFO investigators are expected to examine whether individual traders personally benefitted by manipulating benchmark Forex prices.
- It is claimed that traders colluded via online chat rooms in groups with names such as the Bandits Club, the Dream Team and the Cartel.
The SFO’s new criminal investigation into alleged currency markets rigging in London, which is home to more than 40% of the world’s foreign currency exchange trading, will join a number of current investigations into Forex market abuse by investigators in other countries across Europe, Asia and the United States. The SFO’s portfolio of very large investigations into corruption cases, LIBOR and other fraud continues to grow.
The British financial regulator, the Financial Conduct Authority, has itself already launched an investigation into global currency markets, in October 2013.
Today’s announcement from the SFO will put further pressure on banks and traders who run the risk of regulatory sanctions as well as criminal prosecutions in one or more countries.
Such is the seriousness of the matter that, in March 2014, the Bank of England appointed Lord Grabiner QC to adjudicate on whether any Bank of England officials themselves were involved in manipulating the Forex market, and specifically whether any Bank official, during the period July 2005 to December 2013: