US probe into the Bank of England’s handling of the forex inquiry

By Nicole Miskelly | 14 May 2015

US prosecutors are probing into what the Bank of England (BoE) knew about the way traders’ behaved in the foreign exchange (FX) market, the FT reports.

The integrity of the central bank has come into question because US prosecutors have raised concerns over the thoroughness of the Bank of England’s report and the handling of the forex inquiry.

According to the FT, the Department of Justice has been making secret requests, without informing the UK authorities, to hold an interview with a senior RBS forex trader who was previously questioned by the BoE during their own investigation to uncover whether any of its own officials knew about the manipulation of the forex market.

The Department of Justice have requested to interview James Pearson, head of RBS’S European forex trading at the US embassy, the FT reports.  Pearson was part of a group of chief dealers who regularly attended meeting with bank officials to discuss the forex, one of the world’s largest financial markets. Pearson is one of just two traders who kept their jobs after cuts were made by the five banks under investigation.

BoE’s previous £3m forex inquiry, which was led by veteran City litigator, Lord Grabiner QC, cleared bank officials of any  wrongdoing, however, according to the FT, an official who has since been dismissed for unrelated matters, said that officials should have escalated any concerns to superiors.

The parliamentary Treasury select committee also raised concerns this year over whether the terms of the inquiry had been drawn too closely, however, during the time of the inquiry BoE governor, Mark Carney, told the committee that the Grabiner report was “thorough and comprehensive”.

The Department of Justice’s request comes at a time when BoE has been trying to present itself as a more accountable and transparent institution, despite recently being drawn into a criminal investigation by the UK serious Fraud Office which is looking into whether any BoE officials’ were involved in the manipulation of money-market auctions during the initial stages of the financial crisis.

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