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Fraud office probes BoE over liquidity auctions

The Serious Fraud Office is investigating the Bank of England over liquidity auctions it held during the financial crisis.

A statement from the Bank confirms it began its own investigation, led by Lord Grabiner QC, into liquidity auctions in 2007 and 2008 and subsequently referred this to the SFO in November 2014.

The Bank says: “Following the confirmation by the Serious Fraud Office (SFO) 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 says: ”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.”

In November 2014, the Financial Times reported that the Bank had opened an investigation into the possible manipulation of auctions designed to boost liquidity as the credit crisis took hold.

The Bank lent money against low and negative interest rates in exchange for collateral including asset-backed securities, the FT reported.

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