SFO closes investigation into Bank of England liquidity auctions

UK prosecutors have closed an investigation into possible manipulation of Bank of England liquidity auctions during the financial crisis after deciding there was no evidence of criminality.

The auctions allowed the central bank to provide firms with liquid assets in exchange for those that had good credit quality but were proving hard to sell in stressed markets.

The Serious Fraud Office’s investigation, which began in December 2014, focused on whether the auctions were rigged to help some firms bid for the funding at the possible expense of others.

The SFO said: “After a thorough investigation the SFO concluded that there is no evidence of criminality in relation to this matter.”

In a statement, the Bank of England said it had allowed a systemically important institution in “grave financial difficulty” to place bids for a greater level of funds. This was the matter referred to the SFO.

The investigation came after the Bank of England referred to issue to the prosecutors following an inquiry led by barrister Anthony Grabiner, a member of the House of Lords and a non-executive director of Goldman Sachs International since July 2015.

The Bank of England said: “Given that the SFO has now completed a thorough and rigorous criminal investigation, it is not appropriate for the Bank to publish any further material.”

The central bank said it incurred just over £4.7m in legal costs in connection with the SFO’s investigation.

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