Bankers who rigged interest rate markets in London engaged in “highly reprehensible” acts if proven true, according to the head of England’s central bank, and may be under criminal investigation for fraud.  If reports are accurate, this could be the first serious investigation of fraud targeting high ranking big bank executives since 1998 when Brooksley Born was replaced as CFTC chairperson, a point benchmarked by certain reformers as a point at which the breakdown in justice first occurred.

Lloyds Banking Bankers

Britian’s Serious Fraud Office currently reviewing Lloyds Banking Group

Reuters is reporting Britian’s Serious Fraud Office (SFO) is currently reviewing evidence that might trigger a criminal probe into current and former staff at Lloyds Banking Group PLC (ADR) (NYSE:LYG) (LON:LLOY).

If fraud is discovered it would be highly unusual for a bank which is 25 percent owned by the government to be involved in fraud.

Quoting sources, Reuters is reporting the SFO was given information by the UK Financial Conduct Authority (FCA) related to an inquiry into alleged manipulation of benchmark rates.  One such scheme was said to include a rigging method used to set the fees on a taxpayer-backed funding scheme for banks.

Lloyds Banking Group’s recent scandal

Lloyds Banking Group PLC (ADR) (NYSE:LYG) (LON:LLOY) was recently handed a joint $370 million by the FCA and U.S. regulators for its part in a global interest rate rigging scandal and became the first bank to face charges it attempted to manipulate the “repo” rate used to set fees Lloyds paid to access central bank liquidity.  The report says four traders and two managers are involved in the potential fraud.

“Such manipulation is highly reprehensible, clearly unlawful and may amount to criminal conduct on the part of the individuals involved,” BoE Governor Mark Carney wrote on July 15 in a letter published by Lloyds Banking Group PLC (ADR) (NYSE:LYG) (LON:LLOY) on Monday.

“The SFO’s investigation into rate rigging involves considerable co-operation and information sharing with other agencies, including the Financial Conduct Authority and the U.S. Department of Justice,” the SFO said in a statement.

In a previous civil case, the FCA charged 19 staff at Lloyds Banking Group PLC (ADR) (NYSE:LYG) (LON:LLOY) and its Bank of Scotland subsidiary were directly involved in or aware of the rate rigging scheme. Another three are also under investigation by the bank, one of the sources told Reuters.  As a result, six Lloyds’ employees have been suspended, while six others executives face disciplinary proceedings while 10 are no longer employed at the bank.