Britain’s Fraud Investigating Body Shuts Down Libor Rigging Probe
Britain’s Serious Fraud Office (SFO) has announced that it is ending its investigations into allegations of massive collusion to fix the benchmark interest rate or the London Inter-bank Offer Rate (Libor). It suspended the investigation citing the low probability of getting a conviction in court due to lack of evidence.
This cancellation comes after a court in January cleared six traders who had been charged for rigging Libor rates. The Libor rigging scandal has so far resulted in regulators of both the United Kingdom and United Sates levying penalties amounting to nearly $10 billion on the banks that violated these laws. Some of the world’s largest banks were fined after being found guilty including Citigroup, Barclays, UBS, HSBC, Bank of America, Royal Bank of Scotland, JP Morgan, and Merrill Lynch.
The Financial Conduct Authority (FCA), UK’s financial regulator which has so far issued penalties of £1.4 billion, established that traders formed groups wherein information was exchanged and rates were fixed.
In 2014 the FCA asked the SFO to investigate the case further. As a part of the enquiry, the SFO examined over a half a million documents and 27 key employees of the banks involved.
It has however concluded after a one and a half year investigation that it will not be able gather sufficient evidence to successfully charge individuals for wrong-doing.
In a statement, SFO said,
Whilst there were reasonable grounds to suspect the commission of offences involving serious or complex fraud, a detailed review of the available evidence led us to the conclusion that the alleged conduct, even if proven and taken at its highest, would not meet the evidential test required to mount a prosecution
According to the SFO there is no very little possibility to gain more credible evidence, which meant that the best decision was to shutdown the investigation. The only prosecutorial success SFO has had is in the case of Tom Hayes, a UBS trader. Hayes was found guilty of fraud in 2015 and sentenced to 11 months in jail.
Ben Rose a white-collar crime expert and co-founder at law firm Hickman & Rose has stated that the high-profile failure of its earlier case in January has dissuaded SFO from continuing its investigation. The SFO will however continue its collaboration with U.S. Department of Justice’s criminal investigation into the allegations.
The cancellation of the criminal investigation however does not mean that the individuals involved would be exempt from further action. The FCA could decide to pursue a civil case against them which has a lower bar in terms of proof required, possibly leading to bans or more fines.
