BoE faces probe into 2008 emergency auction rigging

SFO initiates investigation

The Serious Fraud Office (SFO) has initiated an investigation into the Bank of England's emergency auctions in the early days of the financial crisis.

The investigators are looking at whether the central bank had rigged the auctions by telling all lenders to bid at roughly the same rates in an attempt to keep the markets calm, the Financial Times reports. Overbidding during the auction could have exposed the desperate situation that certain banks' balance sheets were in, creating panic in the already crumbling markets. Emergency auctions were introduced in 2007, amid a freeze in money market liquidity, to provide lenders with access to emergency liquidity and allow them to trade a wider range of assets for funding. BoE asks FCA t...