SFO launches BoE investigation

The Bank of England issued the following statement:

“Following the confirmation by the Serious Fraud Office that it is investigating material referred to it by the Bank of England, the Bank can now confirm that it commissioned Lord Grabiner QC to conduct an independent inquiry into liquidity auctions during the financial crisis in 2007 and 2008. Following the conclusion of that initial inquiry, the BoE referred the matter to the SFO on 20 November 2014. Given the SFO investigation is ongoing, it is not appropriate for the Bank to provide any additional comment on the matter at this time.”

An SFO statement added:

”The SFO can confirm it is investigating material referred to it by the Bank of England concerning liquidity auctions during the financial crisis in 2007 and 2008. The material is the result of an independent inquiry that the Bank of England commissioned into this matter. The Director of the SFO, David Green CB QC, accepted the case for investigation in December 2014.”

Phil Beckett, partner at Proven Legal Technologies, commented:
 
“This is an example of serious employee malpractice that could have been captured by a more thorough and regular analysis of communications. Banks in the UK have a history of not providing all the information required by the regulators and there have been a number of recent issues with the Financial Conduct Authority when banks have failed to provide all necessary information. But if big organisations are being fined, what skeletons exist in the cupboard for the smaller companies?
 
"As the investigation continues, all mediums of communication (especially chat and voice data) are going to be crucial to the investigatory process. The ability to analyse this data in association with key data from the attempted manipulation therefore becomes essential. The people involved have probably interacted regularly across internal and external channels, so the potential pool of messages that could contain relevant data can be very large. Analysts therefore need to scour this information carefully and intelligently to find the key messages that relate to the case.
 
"Until now, audits of company data have primarily been used posthumously as way of finding out “what went wrong”. However, prevention is always better than cure, and the financial services sector needs to get much better at using technology to proactively spot problems before they occur if they are to avoid future fines of this kind.”