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Forex Investigations Heat Up

Wednesday, 16 April 2014

The foreign exchange markets are the latest area of finance to attract the close scrutiny of regulators.

The FCA confirmed that it was ‘conducting investigations alongside several other agencies into a number of firms relating to trading on the foreign exchange (forex) market’ back in Autumn 2013.

The UK regulator along with its Swiss counterpart recently stepped up their investigations into the forex markets after evidence suggested that important rates had been affected.

The investigations follow numerous other scandals that have led to huge fines for financial companies and individuals involved. The most significant have been related to the manipulation of Libor, the benchmark interest rate.

Who is Being Investigated?

An international effort is being made by regulatory authorities to see if there has been collusion and deliberate manipulation of foreign exchange rates. Regulators are actively investigating in the UK, Switzerland, the US, Singapore and Germany.

Swiss regulators have confirmed that they are investigating a number of banks including RBS, Barclays, UBS, Credit Suisse, Zuercher Kantonal Bank, Julius Baer, JP Morgan and Citigroup. Meanwhile US regulators in New York have requested information from a large number of financial institutions including Deutsche Bank, Goldman Sachs and RBS.

In the UK, the investigation has even gone to the heart of the City as the Bank of England called in Anthony Grabiner QC to conduct an internal investigation of the Bank’s own staff. That followed an earlier review which led to the suspension of a member of staff at the beginning of March.

What is the Potential Fallout?

Martin Wheatley, the head of the Financial Conduct Authority, has suggested that manipulation of the currency markets was "every bit as bad" as the Libor scandal. He also warned that, “Given what has come out, no, people won't trust the way rates are fixed.” Bank of England Governor, Mark Carney has said, “This is as serious as Libor, if not more so because this goes to the heart of integrity of markets.”

If the fines levied against firms caught out by the Libor investigations are anything to go by then there will be billions of dollars of financial penalties at stake. In addition, individual traders involved in the scandal could faces severe sanctions including suspensions, fines, lifetime bans and even criminal charges leading to imprisonment. Tens of traders have already been sent on leave, suspended or fired by various financial institutions since investigations began.


Any firm or individual at risk of a regulatory investigation should seek immediate legal advice. For specialist advice contact James Crighton or telephone 0207 611 4848.

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