The City’s watchdog has launched a probe into whether the UK government bond market was manipulated by a trader at Lloyds Banking Group.
The Financial Conduct Authority (FCA) is looking into whether at least one Lloyds trader sought to increase profits by driving down the price of the bonds or by inflating their prices when the bonds were sold on.
The industry watchdog and the bank both declined to comment.
The FCA’s investigation, which is at an early stage, was first reported in the Wall Street Journal yesterday evening.
The banking industry is still reeling from the Libor rate rigging scandal that saw Lloyds agree to pay £226m in compensation following an investigation from the FCA and a US trading commission.
Six banks, including, Barclays and Royal Bank of Scotland agreeing to pay a combined $5.8bn (£4bn) to the US Justice Department and other regulators in 2015.
Lloyds is still partly owned by the taxpayer after it was bailed out during the financial crisis, although the government has returned most of its stake to private ownership.
The remaining nine per cent is expected to be offloaded later this year.
The FCA is also reportedly working with the Department of Justice on a broader investigation into multiple global investment banks over rigging of the wider government bond market.