LONDON Britain's anti-fraud agency is examining information from a global investigation into the possible manipulation of currency markets, in the first sign it might follow the United States in launching a criminal investigation.
Britain is keen to be at the forefront of a global inquiry into the $5 trillion-a-day foreign exchange market, partly because about 40 percent of it is based in London. Britain's finance industry watchdog, the Financial Conduct Authority (FCA), began its own probe into currency markets last year.
"The SFO (Serious Fraud Office) is receiving and examining complex data on this topic. If and when we open a criminal investigation, that decision will be announced in the usual way," David Green, SFO head said in a statement.
The U.S. Department of Justice launched its own criminal inquiry last October. But the SFO tends to be late to the party when it comes to global investigations, partly because of a tight annual budget. This forces it to ask its government paymasters for specific funds to pursue complex inquiries.
Nevertheless, in a parallel global inquiry into whether traders manipulated Libor benchmark interest rates, the agency has now charged 12 individuals - more than the eight charged in the United States - and is the only prosecutor to have brought defendants to court.
BANKERS BEHAVING BADLY
The fact that material linked to the currency investigation has landed on the SFO's desk could mean the FCA watchdog has now found possible evidence of criminal wrongdoing during its own examinations and passed this on, some lawyers said, although agencies might also just be keeping each other abreast of more general developments.
"This happens when the regulators believe three things – the matter is really serious, there is sufficient public interest or political pressure to justify major budgetary commitment and there seems to be enough evidence to convince a jury to the high 'beyond reasonable doubt' test rather than the lower 'more likely than not' standard that a regulator is allowed to use," Simon Morris of law firm CMS Cameron McKenna, said.
“As well as overseas regulators, we are working very closely with the relevant UK agencies, including with the Serious Fraud Office. If we find evidence of criminal misconduct falling outside of our powers we will pass that evidence on to the Serious Fraud Office for them to consider investigating,” an FCA spokesman said.
Its head of enforcement and financial crime Tracey McDermott told Reuters just over a month ago she had yet to conclude there had been any misconduct in the foreign exchange market, despite trawling through reams of data.
The worldwide investigations into currency markets and benchmark interest rates show banks are still struggling to control some trader behaviour despite tighter regulatory scrutiny in the wake of the 2008-2009 financial crisis. Banks have already been fined around $6.0 billion by U.S. and European regulators to settle allegations of Libor rate fixing. Some are now quick to try to draw a line under any suspicions of misconduct.
Having launched exhaustive internal investigations, banks including Deutsche Bank, Barclays, Citigroup, UBS and HSBC have fired, suspended or placed on leave around 40 foreign exchange traders globally.
In some cases, their actions may turn out to be overly hasty. British bank Lloyds said on Thursday it had reinstated a foreign exchange trader suspended earlier this year with no disciplinary action taken. [ID:nL6N0OM2JJ]
(Reporting by Kirstin Ridley, editing by Jane Merriman and Jason Neely)