(Recasts with Libor priorities, adds details about fake
letters, dark pools)
By Kirstin Ridley
LONDON, July 17 Britain's financial watchdog
said it had prioritised the worst cases of Libor benchmark
interest rate fixing, providing a signal that the largest fines
for banks' alleged role in the scandal may already have been
Ten banks and brokerages have paid around $6 billion to date
to settle U.S. and European regulatory allegations that they
manipulated rates such as Libor (London interbank offered rate),
a benchmark against which around $450 trillion of financial
products from derivatives to home loans are priced worldwide.
The market has long been braced for similar settlements with
Lloyds and Deutsche Bank, which has already
been fined by the European Commission over alleged involvement
in benchmark interest rate cartels. Industry sources say these
two investigations are slowly nearing conclusion.
Martin Wheatley, the chief executive of the Financial
Conduct Authority (FCA), said outstanding settlements had been
delayed because some investigations had gone beyond Libor and
because of the complexities of regulatory coordination.
"There are still some investigations or actions we have not
completed on Libor ... Why are they still ongoing? They weren't
as serious as the cases we took first," Wheatley told reporters
on Thursday after the watchdog's first public annual meeting
since its creation last year.
"There are complications in some of those (outstanding)
cases where it has become clear it is not just Libor we are
looking at ... and in some cases it's the need to coordinate and
cooperate with multiple other agencies," he added.
FOREX PROBE CONCLUSION?
The FCA is among around 15 authorities around the world to
investigate allegations of collusion and price manipulation in
the largely unregulated $5.3 trillion-per-day currency market,
by far the world's largest.
Banks including Deutsche Bank, Lloyds, Citigroup,
Barclays and JP Morgan Chase have fired or
suspended - and in some cases reinstated - foreign exchange
traders in the row over alleged manipulation.
Wheatley reaffirmed that he hoped to complete the foreign
exchange investigation next year, while warning that the
complexity of the inquiry made timing unpredictable.
"That is certainly our target," he said.
"But I do know that these things are very complicated ... so
even 2015 would be a relatively short time-scale given the
difficulties and complexities of these cases," he said.
David Green, the head of Britain's Serious Fraud Office
(SFO), said last month the agency was examining information from
the global investigation of currency markets, the first sign
that the prosecutor may launch a criminal investigation.
The fact that material linked to the currency investigation
has landed on the SFO's desk could mean the FCA has found
possible evidence of criminal wrongdoing during its own
examinations and passed this on, some lawyers said at the time.
Wheatley declined to comment, saying only that the FCA had
cooperated with the SFO on a variety of investigations.
FAKE LEGAL LETTERS
The FCA is also keeping a keen eye on what it called a
"quite widespread practice" by firms across industries to send
customers bogus letters from fictitious law firms or in-house
litigation departments in a move designed to pressure clients
into paying bills.
Lloyds has admitted the bank had issued debt collection
letters under the name of a law firm, and payday lender Wonga
has already been ordered by the FCA to pay 2.6 million pounds in
customer compensation for a similar practice.
"We are in the process of gathering more information,"
Wheatley said, adding: "I don't think it would be fair to say,
until we have a full picture, how widespread it will go."
(Additional reporting by Clare Hutchison; Editing by Pravin
Char and Jane Baird)