Tag: Libor

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Article: Criminal investigation into possible price rigging in London foreign exchange market

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Criminal investigation into possible price rigging in London foreign exchange market

Merco Press, 22 July 2014

The United Kingdom Serious Fraud Office (SFO) has launched a criminal investigation into allegations of price rigging in the £3tn-a-day foreign exchange market. The probe will look into allegations of “fraudulent conduct”, the director of the SFO said in a statement.

Around 15 international agencies are investigating allegations of collusion and price manipulation. It is alleged that traders used online chat-rooms to plan the fixing of benchmark prices.

The Financial Conduct Authority (FCA) said in October it had joined other regulators around the world in scrutinizing firms over the potential manipulation of the foreign exchange market.

Several investment banks, including Barclays and HSBC have already suspended currency traders due to the investigation by the FCA. And in March this year the Bank of England suspended one member of staff over the probe.

At the time the head of the Financial Conduct Authority, Martin Wheatley, said that currency manipulation was “every bit as bad” as the Libor scandal, where banks including Barclays, Royal Bank of Scotland and UBS paid fines totaling 6bn dollars relating to Libor fixing.

For the criminal probe the SFO will work in co-operation with the FCA and the US Department of Justice, which announced its own criminal investigation last October.

Earlier this year US prosecutors flew to London to question individuals over allegations of market manipulation.

The Serious Fraud Office is an independent UK government department responsible for investigating and prosecuting serious and complex fraud, bribery and corruption. It is headed by the Director, David Green CB QC, who exercises powers under the superintendence of the Attorney General. These powers are derived from the Criminal Justice Act 1987.

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Article: Osborne to target foreign exchange manipulation in City clean-up

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Osborne to target foreign exchange manipulation in City clean-up

Kamal Ahmed, 02 June 2014

The obscure and complicated foreign exchange market is to be the next target of Treasury action, I have been told.

The chancellor is working with Whitehall officials and the international Financial Stability Board (FSB) on new regulations which will be imposed on the market. At the moment, foreign exchange (known in City shorthand as “forex”) is largely unregulated and left to the bank traders who execute deals on behalf of global companies. Companies use forex deals to move money between different currencies and a large part of the market is dealt through London.

One senior official I have spoken to agreed that the public would be “very surprised” that such a major market was clearly open to abuse. The Treasury is likely to announce a set of measures to “clean up the market”, probably in the next fortnight.

The prices in forex are set by traders who are doing the deals. Traders are able to pick a selection of the trades they have been asked to execute, meaning they can choose those most advantageous to their bank. The prices are set at the 4pm “fix”, a daily City benchmark against which currencies are priced. I have written a short “How It Works” at the end of this blog on the allegation that forex is manipulated.

Regulators around the world including the Financial Conduct Authority (FCA) in London and the US Department of Justice are investigating allegations of forex manipulation. It has been reported that at least 15 banks are involved and nine are thought to have suspended or fired traders. No allegations have been proved and no admissions of fault made.

Martin Wheatley, the head of the FCA, said the allegations, if substantiated, could be “every bit as bad as Libor”, referring to the revelations three years ago that the market which governs how banks lend to each other was regularly fixed.

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Article: Former Royal Bank of Scotland trader linked to currency market fixing

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Former Royal Bank of Scotland trader linked to currency market fixing

Jill Treanor, 12 OCtober 2013

Electronic messages that Royal Bank of Scotland handed to the City regulator in connection with potential manipulation of the £3tn-a day currency market are reported to have been sent by the bailed-out bank’s former trader Richard Usher.

The messages are said to be among those handed to the Financial Conduct Authority (FCA) by the bank, which is 81% owned by the taxpayer.

Usher, who could not be reached for comment, is now the head of spot trading at JP Morgan in London. He has been listed as a member of a Bank of England committee that polices a voluntary code of group practice for the markets.

The regulatory review by the FCA, which has not yet escalated its inquiries into a formal investigation, implies no wrongdoing by Usher, according to the Bloomberg news agency, which revealed his identity.

The analysis of the electronic messages is the latest move by regulators to test the integrity of benchmarks used to price financial products in the light of the Libor-rigging scandal as well as manipulation of gas prices. The investigation was triggered by reports in the Guardian last year.

The FCA said in June it was looking at foreign exchange markets after Bloomberg reported that traders at some banks were sharing information about their positions through instant messages. These were said to be a way to manipulate an index compiled by WM/Reuters and based on prices of currencies for a 60-second period.

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Article: Royal Bank of Scotland fined £390 million for LIBOR failings

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Royal Bank of Scotland fined £390 million for LIBOR failings

John Fitzsimons, 06 February 2013

Royal Bank of Scotland (RBS) has been fined £390 million for its attempts at manipulating the London Interbank Offered Rate (LIBOR).

LIBOR is essentially the rate at which banks lend money to each other. Every day banks are required to submit their interbank borrowing rates confidentially to Thomson Reuters, which then works out LIBOR on behalf of the British Bankers’ Association. For more on LIBOR and why it matters, check out What is Libor?

An FSA investigation found that over a four year period between January 2006 and November 2010 employees of RBS engaged in all sorts of activities that would lead to incorrect LIBOR submissions. By lying about what its real interest rates were, RBS was in a position to manipulate the market, allowing its traders to cash in.

The FSA’s investigation found at least 219 documented requests for inappropriate submissions, with 21 individuals involved identified.

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Article: HSBC scandal further erodes credibility of UK banking industry

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HSBC scandal further erodes credibility of UK banking industry

AFP, 22 July 2012

London: A scandal erupting at Europe’s biggest bank HSBC has added to concerns over the state of Britain’s financial sector amid the Barclays rate rigging affair and as the industry faces a major shake-up.

HSBC last week apologised and its head of compliance David Bagley resigned after US lawmakers accused the London-based bank of failing to apply anti-laundering rules, benefitting Iran, terrorists and drug dealers.

The HSBC affair follows hot on the heels of the Libor interest rate rigging scandal that has brought down top executives at Britain’s Barclays bank — most notably its chief executive Bob Diamond and chairman Marcus Agius.

Regulators are reportedly investigating HSBC, as well as Credit Agricole, Deutsche Bank and Societe Generale, over alleged manipulation of the Libor rate after Barclays was recently fined £290 million (Dh1.66 billion) over the affair.

Britain’s financial regulator, the Financial Services Authority (FSA), has said its Libor probe is looking at seven groups, which are not only British institutions.

Bank of England governor Mervyn King has meanwhile proposed that central bank governors and regulators discuss Libor reform at their upcoming meeting in Basel, Switzerland, on September 9.

Barclays has admitted attempting to manipulate the Libor and Euribor rates between 2005 and 2009.

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Article: Barclays guilty of market manipulation

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Barclays guilty of market manipulation

moneyweek, 27 June 2012

Barclays Bank is to pay a 290 million pound fine following an investigation by UK and US regulators into manipulation of inter-bank lending rates.

The bank’s top executives, including Chief Executive Bob Diamond, have agreed to waive their bonuses this year as a result. City watchdog, the Financial Services Authority (FSA), said Barclays’ regulation breaches were “serious, widespread and extended over a number of years”.

It accused the bank of having inadequate systems and controls in place until June 2010 and of failing to review its systems and controls at a number of appropriate points. Continue reading “Article: Barclays guilty of market manipulation”

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