According to sources cited by the Financial Times, the UK’s Serious Fraud Office (SFO) is the latest body to join the FX fixing manipulation investigations which are unfolding around the globe. Following the Financial Conduct Authority‘s (FCA) investigation in the UK, the US Department of Justice has already launched a criminal proceeding which could seriously further damage the reputation of global financial institutions worldwide.
No major banks have managed to stay out of the investigation, despite reports about Swiss bank, UBS, to be the first to cooperate with authorities and potentially receive immunity as it already has with the LIBOR investigation case. There is a growing likelihood that leading global financial institutions will be forced to put reserves aside for handling the already escalating legal costs related to fraudulent FX market conduct.
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The latest legal costs paid by major financial institutions have been mortgage-related fraud, as the two banks which were saved by the taxpayer back in 2008, Bank of America and Citi, announced that they are putting aside close to $20 billion for settling. Ironically, that was the amount dedicated to each bank as part of the so-called Targeted Investment Program, after they had already received $25 billion in capital investments.
Criminal proceedings against major financial institutions can have severe systemic consequences, hence the opposition by MPs of the involvement of the SFO into the LIBOR fixing investigation back in 2012. According to the sources cited by the FT, the formal announcement should be made before the end of the month.
At the time of publication, there was no official confirmation that a formal criminal investigation had been started by the SFO against parties involved in the FX fixing manipulation.