Serious Fraud Office drops forex-rigging investigation

Britain's fraud prosecutor has called off a criminal probe into the rigging of the £3.5 trillion-a-day foreign exchange market.

The Serious Fraud Office said while it had “reasonable grounds” to suspect wrongdoing, there was little hope of it getting a conviction.

The latest setback for the SFO comes two months after six traders were cleared of rigging Libor rates in a high-profile prosecution brought by the agency.

A host of the world’s biggest financial institutions – Royal Bank of Scotland, Barclays, Citigroup, UBS, JP Morgan, HSBC and Bank of America Merrill Lynch – have paid almost $10 billion (£7 billion) in fines to regulators on both sides of the Atlantic for manipulating markets since 2014.

The Financial Conduct Authority – which levied £1.4 billion in fines in November 2014 and May last year – found that traders formed tight-knit groups such as “the three musketeers” and “the A-team” to share information and fix rates at the expense of their clients.

In July 2014 the FCA referred the case to the SFO, which then launched an investigation involving 27 staff and the review of more than half a million documents.

But the SFO said that based on the material obtained, “there is insufficient evidence for a realistic prospect of conviction”.

It added: “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.”

It was decided, the SFO added, that “this evidential position could not be remedied by continuing the investigation”.