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UK police may bring forex fraud charges

Wednesday, July 23 17:31:12

British prosecutors could charge the first individuals in connection with a global investigation into alleged manipulation of currency markets as soon as next year, the head of the country's Serious Fraud Office (SFO) said today.

David Green, who announced on Monday that the SFO would join U.S. prosecutors and regulators worldwide in investigating allegations of misconduct in the $5.3 trillion-per-day foreign exchange market, said he had "reasonable grounds" to suspect that an offence of serious or complex fraud was involved.

"I think it would be ambitious to expect charges this year but ... I wouldn't discount that possibility (next year) at all," he said.

"We're (currently) having a fairly focused inquiry into a limited number of individuals and a limited number of financial institutions, including banks, and we'll take that as the first phase and see where we go from there."

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.

Green, who took over as SFO director in April 2012 vowing to focus on top-tier economic crime, has been tasked with restoring confidence in the agency after his predecessor was accused by lawmakers of running a "sloppy and slovenly" operation.

The SFO, which operates on a tight budget of around 33 million pounds ($56 million), can request extra "blockbuster" funding from its government paymasters for exceptionally costly cases. It has yet to request such additional funds for its fledgling foreign exchange (forex) probe.

"I don't yet know if I'll need it," Green said. But he added: "My guess would be that we will."

He declined to be drawn on whether the evidence seen so far indicated that allegations of wrongdoing in forex markets eclipsed those that shredded faith in interest rate benchmarks such as Libor (London interbank offered rate), against which around $450 trillion of financial contracts are priced globally.

Ten banks and brokerages have been fined around $6.0 billion to date to settle regulatory allegations of benchmark interest rate manipulation and 17 men have been criminally charged - 12 by the SFO. More charges and fines are expected.

At the centre of the forex investigations is activity around the 4 p.m. currency fix in London, a 60-second window where key exchange rates are set. These prices are used as reference rates for trillions of dollars of investment and trade globally. (Reuters) For more visit: www.businessworld.ie