Serious Fraud Office to probe Bank of England’s liquidity auction

Caitlin Morrison
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Bank of England liquidity auctions are under investigation (Source: Getty)
The Serious Fraud Office (SFO) is investigating Bank of England liquidity auctions held during the financial crisis in 2007 and 2008.

The central bank confirmed last night that it had handed over the findings of an independent inquiry conducted by Lord Grabiner QC into whether any bank officials knew of, or took part in, attempts to rig the money market auctions, which were aimed at increasing cash in the credit market.

Following the conclusion of the initial inquiry, the bank made the decision to refer the material to the SFO. It said that given the SFO investigation is ongoing, it would not be appropriate for the bank to make any additional comment.

Andrew Tyrie MP, chairman of the Treasury Committee, said he was informed on 21 November that the bank had referred the matter to the SFO when Lord Grabiner’s initial findings were made clear.

“This was the right thing to do,” he commented. “We must now await the outcome of the SFO’s work. The sooner their findings are published the better.”

A spokesperson for the fraud watchdog said last night: “The SFO can confirm it is investigating material referred to it by the Bank of England concerning liquidity auctions during the financial crisis in 2007 and 2008.”

Lord Grabiner also conducted the investigation into foreign exchange benchmark manipulation at the Bank of England, the results of which have been discussed in front of the Treasury Select Committee this week.

The Grabiner inquiry found that ex-Bank of England chief currency dealer Martin Mallett had failed to escalate concerns over the behaviour of forex traders from 2008.

Mallett was sacked last November for “serious misconduct”, a day before Grabiner’s findings on forex were published. Mark Carney, governor of the Bank of England, told the Select Committee this week that Mallett was not fired because of the inquiry, but due to “at least 20 examples” of other misjudgements.

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