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March 7, 2014

Bank of England Suspends Worker as Currency Inquiry Expands

“The Bank of England said on Wednesday that it had suspended an employee as it escalated a review into whether bank officials had known about or condoned potential manipulation of the currency markets.”

“The British central bank also released minutes of meetings between officials and industry representatives that indicated that there were concerns about possible manipulation for rates like the 4 p.m. fix for the pound to the United States dollar as early as July 2006.”

“As regulators in Britain, the United States and other countries investigate whether traders at the world’s largest banks colluded to manipulate foreign exchange rates, questions are being raised about the Bank of England’s role as a watchdog. Two years ago, the Bank of England and other regulators were criticized by British lawmakers for failing to recognize the manipulation of the London interbank offer rate, or Libor, and taking steps to stop it.”

“Alarm bells should be ringing when a central bank suspends staff in connection with market rigging,” said Simon Morris, a partner at the law firm CMS Cameron McKenna in London. “This is serious because the whole basis of regulation is based on trust and integrity.”

“On Wednesday, the bank said that its oversight committee had begun an investigation to determine whether bank officials were involved in or knew about attempted or actual manipulation of the currency markets or any other improper behavior in the foreign exchange markets.”

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Read full New York Times DealBook article here.

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