Traders are being investigated for attempting to rip off taxpayers by manipulating quantitative easing as the Bank of England desperately tried to rescue the economy two years ago.
by Philip Aldrick, The Telegraph:
Paul Fisher, the Bank’s executive director for markets, told MPs on the Treasury Select Committee (TSC) that a QE programme may have been “manipulated” by gilt edged market makers (GEMMs) in October 2011. He passed the information onto the financial regulator, which is still investigating the case.
If evidence of attempted manipulation is found, he said: “It would be thoroughly reprehensible and appropriate actions would follow.” The claims follow the Libor rate-rigging scandal, which shamed the banking industry and saw several lenders fined hundreds of millions of pounds. Three bankers have been charged with fraud in the UK.
The latest allegations relate to a “reverse auction” of gilts conducted by the Bank on October 10, 2011, shortly after QE2 started. On that day, one lender tried to sell gilts to the Bank at an inflated price. Officials spotted the sudden spike and pulled out of the deal.
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