View the article online at http://citywire.co.uk/money/article/a891567
SFO drops investigation into foreign exchange rigging
Serious Fraud Office says it has not found enough evidence to secure convictions after investigation lasting more than 18 months.
The Serious Fraud Office (SFO) has dropped its investigation into rigging of the foreign exchange market, claiming it has found 'insufficient evidence for a realistic prospect of conviction'.
The SFO took on the case in July 2014 after a referral from the Financial Conduct Authority. But after scouring 'in excess of half a million documents' it has now closed the probe.
'Whilst there were reasonable grounds to suspect the commission of offences involving serious or complex fraud, a detailed review of the available evidence led us to the conclusion that the alleged conduct, even if proven and taken at its highest, would not meet the evidential test required to mount a prosecution for an offence contrary to English law,' the SFO said in a statement.
The dropping of the case represents a blow and follows the acquittal of six traders alleged by the SFO to have rigged the Libor interbank lending rate earlier this year.
'Coming hot on the heels of the recent Libor verdict this will be embarrassing to the SFO,' said Alison McHaffie, a regulatory partner with law firm CMS.
'However, it does show the difficult job the SFO has in demonstrating criminal activity by individuals for this type of market misconduct and without a change in the law on corporate criminal responsibility. This means it is always easier to impose regulatory fines against the firms themselves rather than criminal prosecutions.'
Regulators in the UK, US and Switzerland hit five banks with a total £2.1 billion fine for foreign exchange rigging in 2014. Citigroup (C.N), HSBC (HSBA), JPMorgan Chase (JPM.N), Royal Bank of Scotland (RBS) and UBS (UBSG.S) were all hit hard, after regulators found ineffective controls allowed traders to collude with each other over a period stretching back nearly six years.
Barclays (BARC) refused to settle with regulators at that stage, as it faced a separate battle with the New York State Department of Financial Services.
But it was hit by a second round of fines, in 2015, coughing up £1.5 billion, alongside a second round of penalties for RBS, JPMorgan and Citigroup.
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