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By Kirstin Ridley
LONDON, June 5 (Reuters) - Britain's anti-fraud agency isexamining information from a global investigation into thepossible manipulation of currency markets, in the first sign itmight follow the United States in launching a criminalinvestigation.
Britain is keen to be at the forefront of a global inquiryinto the $5 trillion-a-day foreign exchange market, partlybecause about 40 percent of it is based in London. Britain'sfinance industry watchdog, the Financial Conduct Authority(FCA), began its own probe into currency markets last year.
"The SFO (Serious Fraud Office) is receiving and examiningcomplex data on this topic. If and when we open a criminalinvestigation, that decision will be announced in the usualway," David Green, SFO head said in a statement.
The U.S. Department of Justice launched its own criminalinquiry last October. But the SFO tends to be late to the partywhen it comes to global investigations, partly because of atight annual budget. This forces it to ask its governmentpaymasters for specific funds to pursue complex inquiries.
Nevertheless, in a parallel global inquiry into whethertraders manipulated Libor benchmark interest rates, the agencyhas now charged 12 individuals - more than the eight charged inthe United States - and is the only prosecutor to have broughtdefendants to court.
BANKERS BEHAVING BADLY
The fact that material linked to the currency investigationhas landed on the SFO's desk could mean the FCA watchdog has nowfound possible evidence of criminal wrongdoing during its ownexaminations and passed this on, some lawyers said, althoughagencies might also just be keeping each other abreast of moregeneral developments.
"This happens when the regulators believe three things - thematter is really serious, there is sufficient public interest orpolitical pressure to justify major budgetary commitment andthere seems to be enough evidence to convince a jury to the high'beyond reasonable doubt' test rather than the lower 'morelikely than not' standard that a regulator is allowed to use,"Simon Morris of law firm CMS Cameron McKenna, said.
"As well as overseas regulators, we are working very closelywith the relevant UK agencies, including with the Serious FraudOffice. If we find evidence of criminal misconduct fallingoutside of our powers we will pass that evidence on to theSerious Fraud Office for them to consider investigating," an FCAspokesman said.
Its head of enforcement and financial crime Tracey McDermotttold Reuters just over a month ago she had yet to conclude therehad been any misconduct in the foreign exchange market, despitetrawling through reams of data.
The worldwide investigations into currency markets andbenchmark interest rates show banks are still struggling tocontrol some trader behaviour despite tighter regulatoryscrutiny in the wake of the 2008-2009 financial crisis.
Banks have already been fined around $6.0 billion by U.S.and European regulators to settle allegations of Libor ratefixing. Some are now quick to try to draw a line under anysuspicions of misconduct.
Having launched exhaustive internal investigations, banksincluding Deutsche Bank, Barclays, Citigroup, UBS and HSBC have fired, suspended orplaced on leave around 40 foreign exchange traders globally.
In some cases, their actions may turn out to be overlyhasty. British bank Lloyds said on Thursday it hadreinstated a foreign exchange trader suspended earlier this yearwith no disciplinary action taken.
(Reporting by Kirstin Ridley, editing by Jane Merriman andJason Neely)
