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Forex fiasco raises temperature around fraud busters

Lawyers were quick to raise question marks over the viability of the UK’s specialist cadre of fraud busters yesterday after officials said that a two-year investigation into alleged rigging of the foreign exchange market had been dropped.

The embarrassing statement from the Serious Fraud Office on Tuesday blamed “insufficient evidence” for the collapse. Yesterday, lawyers were queuing up to stick the knife into David Green, QC, the SFO director, and his oft-maligned organisation.

The announcement “must beg the question as to whether the SFO remains fit for purpose”, intoned Sara Teasdale, a partner at Byrne and Partners, a City of London law firm.

She described the SFO as being “still bruised” from the recent Libor acquittals, and said that its decision to ditch the forex investigation without bringing any charges was “all the more embarrassing” when viewed in contrast to the guilty pleas obtained by US counterparts from Barclays, RBS, Citigroup and JP Morgan.

The Department of Justice in Washington and the Financial Conduct Authority in the UK have also imposed significant fines on six banks, all, according to Teasdale, “in relation to the same factual matrix as recently considered by the SFO”.

Lewis Power, QC, of 7BR chambers in London, described the move as “hugely embarrassing”, considering the SFO had “spent tremendous amounts of money in this investigation and has also been assisted by the US attorney-general”.

But Abdulali Jiwaji, a partner at Signature Litigation, also a City law firm, was more forgiving. He said: “Bringing a prosecution was always going to be challenging, and the recent failed Libor prosecutions underline the difficulty when it comes to persuading a jury.”

Jiwaji pointed out that the SFO’s decision “isn’t directly relevant to potential civil claims, although active prosecutions would have given encouragement to those looking to claim damages. Regulatory actions against individuals are no doubt in the pipeline.”

This article was originally published in The Brief, and can be read here.

Abdulali’s comments were also published in New Law Journal, and can be found here.