The Bank of England recently announced that it had commenced with an investigation into the conduct of one or more of its employees. The alleged misconduct involved the potential rigging of Forex – or ‘foreign exchange’ – markets, which are worth up to £3 trillion a day. The manipulations may have taken place specifically with regards to benchmark fixings, which are relied upon by global banks, investors and companies in order to price investments and deals worth trillions.
Rigging May Have Gone on For Years
According to speculation, there is the possibility that an intention to engage in market fixing may have been discussed as early as 2006. For this reason, the Bank of England has made the decision to release minutes of all meetings that took place between Bank officials and a particular group of foreign exchange traders, who may have been working at several of the world’s largest banks, from 2006 to 2012. These meetings were discontinued shortly before the fixing allegations surfaced in 2013.
Employee is Suspended Ahead of Concrete Evidence
The Bank itself has stated that there is no concrete evidence to support the idea that any member of its staff had taken part in market fixing. Nevertheless, the decision to release 6 years-worth of minutes suggests that attempts may well have taken place – and that the Bank may have even been aware of them. In addition to the main investigation, it is intended that a committee will be formed to oversee further investigations into whether or not the Bank was aware of manipulations taking place. So far, only one Bank of England employee has been suspended, in addition to the numerous traders who have recently been suspended or fired by many of the other major banks. These include Morgan Chase, Barclays and UBS.
In response to the investigation, the Bank of England released a statement. Whilst they reiterated that there is, as yet, no evidence to support fixing, they have sought to reassure both investors and customers that they have ‘re-iterated [their] guidance to staff regarding management of records and escalation of important information.’
Concerns for Consumers
Financial and media outlets have been describing the ongoing situation as being every bit as bad as the Libor scandal which took place in 2012. Larger financial concerns aside, the Libor scandal may very well have had a seriously negative knock-on effect for consumers, who would have unknowingly experienced their mortgages, loans and other financial products being manipulated via calculations made using artificial derivatives. One of the knock-on effects of this highly public investigation was that consumers lost confidence in banks at a time when confidence could not afford to be lost, turning instead to more transparent financial providers to fulfil their lending needs.
A similar concern has already been raised with regards to the recent alleged Bank of England Forex rigging. As yet, there is no evidence to confirm that rigging has taken place. Nevertheless, consumers should be aware and take note of the 2nd high profile to hit British banking in as many years.