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British Treasury Minister calls forex rigging scandal “disgusting” and hopes for prison for financial corruption

November 13th, 2014
12:11 PM ET

By Madalena Araujo, CNN

Britain’s Treasury Minister said on Wednesday that she hopes those investigating financial corruption cases such as the foreign exchange rate-rigging scandal find a way to send those responsible to prison and called their actions "disgusting."

“I sincerely hope that they [the Serious Fraud Office] do find the ability to literally send people to prison over this. I think that certainly taxpayers in Britain would feel a lot better if they felt those responsible went to prison,” Andrea Leadsom told CNN’s Christiane Amanpour.

Following a year-long investigation, the Financial Conduct Authority (FCA) and the US Commodity Futures Trading Commission (CFTC) hit six of the world’s biggest banks in the UK, the U.S. and Switzerland with a record fine of $4.3 billion.

Over a period of six years, the banks attempted to rig the foreign exchange market by allowing traders to share confidential information regarding client orders, and to scheme with colleagues to fix rates and profits.

Leadsom called the corrupt individuals’ wrongdoings “a total disgrace” and said that “people will be livid.”

“I mean, not only was this complete corruption on the part of these foreign exchange traders, but also at a time when the financial sector was being bailed out by the taxpayers. So I mean, it really doesn't get much lower than that. So it is pretty disgusting.”

The case has questioned whether the banking industry has learned the mistakes that contributed to the global financial crisis, or even from the subsequent 2012 Libor rigging scandal.

“I have to stress, it's a small number of corrupt individuals who quite frankly are breathtakingly arrogant, in particular after the LIBOR scandal itself, to still think that they could possibly - I mean, actually stupid, too, to think that they were going to get away with deliberately manipulating foreign exchange prices.”

“I think that the issue is that there is just an attitude in dealing rooms that needs to change. It's just a kind of a, you know, let's meet at a bar and let's discuss how we can make some more money for ourselves. And that absolutely has to change.”

Nevertheless, Leadsom pointed out, the UK government has made an effort to regulate the market.

“I have to say that since we came to office in 2010, we have made some significant changes to the regulatory regime. So you know, we've made it criminally liable to deliberately manipulate a benchmark. We have introduced very tough regulatory regime with the new very powerful Financial Conduct Authority.”

“We've delivered claw backs so that people who get paid and whose subsequent poor performance comes to light can have their bonuses removed from them, even from prior years.”

“So we have taken enormous steps in including more recently the Foreign Effective Market Review, which will effectively set up a proper regulatory environment for seven key benchmarks.”

Perhaps the only good that will come out the rigging scheme is the fact that the fines will go back to the taxpayer.

“Those fines are quite significant. And it will give us the opportunity, as with the Libor fines, where we spent that money of helping the armed forces, the people who do some of the best jobs for us, in this country and they deserve to have that money spent on improving their housing and the facilities available to them.”

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