The Serious Fraud Office (“SFO”) confirmed that, in December 2014, it began an investigation into Bank of England liquidity auctions. This comes as a result of a Bank of England commissioned independent inquiry which reported on possible manipulations of auctions held by the Bank in 2007 and 2008.

The details of the investigation are limited, but it appears that the SFO is considering whether individuals misled the BoE as to the value of mortgage-back securities which were used as collateral against liquidity auctions sought during the financial crisis.

Malpractice by the employees of commercial banks is one thing, but it appears that the BoE has concerns that its own staff may have colluded with commercial banks as well. No disciplinary action against BoE staff has been publicly announced, but presumably the SFO was informed and provided with materials in order to continue the investigation.

There is no public timeline as to when an SFO report is likely, but it is hoped that any final report will be entirely transparent so as to ensure continuing confidence in the BoE.