The Serious Fraud Office (SFO) has been criticised for shutting down its investigation into alleged rigging in the foreign exchange (forex) market after it could not find sufficient evidence to prosecute.
Despite some of the world’s largest banks being fined billions for forex rate manipulation, the UK’s fraud watchdog dropped the probe in March without bringing any charges.
SFO director David Green QC said the decision was made following a ‘thorough and independent investigation lasting over one-and-a-half years and involving in excess of half a million documents’.
The investigation opened in July 2014 after the SFO stepped up its criminal investigation of traders rigging the £3trn-a-day forex market, which followed the Financial Conduct Authority (FCA) flagging concerns banks were manipulating the currency markets.
Some of the world’s biggest financial institutions – The Royal Bank of Scotland, Barclays, Citigroup, UBS, JPMorgan Chase & Co, HSBC and Bank of America Merrill Lynch – have paid almost $10bn in fines to regulators on both sides of the Atlantic for forex manipulation since 2014.
A statement issued by the SFO said: ‘Based on the information and material we have obtained, there is insufficient evidence for a realistic prospect of conviction. While 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. It has further been concluded that this evidential position could not be remedied by continuing the investigation.’
‘The decision was made following a thorough and independent investigation lasting over one-and-a-half years and involving in excess of half a million documents.’
David Green QC, SFO
The decision spurred criticism in the Square Mile, with many suggesting that dropping the probe is a further setback to the SFO’s efforts in prosecuting wrongdoers in the financial markets.
Criminal litigation partner Sara Teasdale from Byrne and Partners commented: ‘The SFO announcement begs the question as to whether the SFO remains “fit for purpose”. Still bruised from the recent Libor acquittals, the SFO’s decision to close its investigation without bringing any charges is all the more embarrassing when viewed in stark contrast to the US Department of Justice’s extraction of guilty pleas from Barclays, RBS, Citigroup and JPMorgan, and the swingeing fines imposed by the FCA and US regulators upon six banks, all in relation to the same factual matrix as recently considered by the SFO.’
Teasdale concluded the SFO was more ‘muted’ in its decision in comparison to US watchdogs, adding: ‘It is surprising that two separate arms of the state appear unable to reach a consistent view in such cases.’
Another City partner said the decision highlighted the ‘SFO’s failure to secure convictions against any of the brokers in the Libor trial’, and that ‘Forex manipulation was always going to be tougher to prove than Libor manipulation’. Meanwhile, Signature Litigation partner Abdulali Jiwaji said the ‘decision isn’t directly relevant to potential civil claims, although active prosecutions would have given encouragement to those looking to claim damages’.
jaishree.kalia@legalease.co.uk