You couldn't make this crap up!

"...The British banking sector has become an organised criminal enterprise which has been allowed to develop because of the criminogenic environment in which it functions, which has resulted from the absence of any meaningful regulation which those who control and manage the banks would fear.

"   In this organised criminal category I include the various mis-selling cases, including pensions, PPI Insurance and interest rate swap derivatives; the criminal manipulation by Barclays and other banks of the LIBOR interest rate structures; the institutionalised level of money laundering as identified in the HSBC case; the serial abuse of the US sanctions provisions as indicated in the Standard Chartered Bank case; as well as many other examples of criminal actions such as theft of client funds, teeming and lading, abuse of client instructions, insider dealing, front running, churning, and market manipulation which have become the subject of international regulatory interventions.

"...If the recent financial devastation in UK financial markets has taught us anything, one qualifier stands out above all the rest of the explanations. The effective ‘regulation’ of the market in financial services in the United Kingdom, particularly in the areas of preventing and forestalling commercial activity which has the capability to undermine the well-being of the financial market, in which I include not only financial criminality and money laundering, but also the pro-active identification and prevention  of financial damage has, to all intents and purposes, totally failed.

"...It has failed despite the huge bureaucratic organisation which has been created for its control, because those who are employed to provide the regulatory oversight of the market, the Lead Regulator, the Financial Services Authority, and the subordinate compliance officers within the individual regulated member firms, do not and have never understood the true nature of the criminogenic personality of so many of those who profess the trade of financial practitioner, nor do they exhibit any great inclination to wish to deal with the egregious activities of these individuals in a 'policing' manner..."

I wrote these words as the opening section of my evidence which  I presented to the Parliamentary Commission on Banking.

My words and indeed, my entire report were completely ignored, and the government servants on the Committee sought to suppress my thoughts, on the grounds that I was saying things 'the banks wouldn't like'!

Well, in the last few days, we have been confronted with two more examples of behaviour of the most egregious kind, which prove, once again, that I was right, and that the British banking sector is a criminal sink, run by a bunch of the most criminogenic individuals, who have no moral compass, but who have no fear of the regulators, and so feel completely at ease with the commission of downright criminal offences.

I am referring to the Co-Operative Bank case, and to the latest scandal oozing from that publicly-owned bag of sleaze, the Royal Bank of Scotland.

It's hard to decide which is the more incredible story, the Co-op case with its lurid tales of sex, drugs and Rock of Ages; or the ghastly crimes being unveiled at RBS as the awful examples of business crime, bad faith, client gouging and general absence of any pretence at commercial ethics, becomes public property.

I think I must start with the RBS case, because it illustrates most clearly how the regulators have completely renounced any pretence they might have had to providing any meaningful regulation of the banking sector.

One of the duties of the regulatory function is to ensure that a regulated member and particularly a bank, is treating its clients fairly.

The FCA spells it out:

  "... Treating customers fairly (TCF) remains central to our expectations of firms’ conduct, that firms put the well-being of customers at the heart of how they run their businesses..."

They continue by identifying how clients have a right to be treated with consideration in these financially difficult times.

"... We expect customers’ interests to be at the heart of how firms do business. Customers can expect to get financial services and products that meet their needs from firms that they can trust. Meeting customers’ fair and reasonable expectations should be the responsibility of firms, not that of the regulator..."

Well, that was clearly not the case with RBS.

Businessman Laurence Tomlinson has delivered a report to Vince Cable in which he outlines examples of egregious behaviour at RBS over the question of the way in which the bank was treating its customers. In his report he refers to an investigation conducted by The Sunday Times, saying;

“...The Sunday Times has uncovered deeply alarming evidence of abuse of small businesses by RBS, which is corroborated by many more cases . . . There is a wealth of evidence which suggests that RBS has forced healthy, vibrant businesses into financial trouble and . . . seized their assets to benefit its own vast property empire...”

The allegations centre on RBS’s feared problem lending division, Global Restructuring Group (GRG), which is tasked with maximising returns on loans deemed “risky”.

But far from being “zombie companies”, many of the firms whose cases the Sunday Times newspaper has examined had never missed a loan repayment and were surviving the economic downturn before the bank pulled their finance.

RBS said it had put the firms into GRG because it did not consider them viable. The unit has the power to rip up loan deals, impose inflated interest rates and fines sometimes running to hundreds of thousands of pounds, drain cash from accounts and halt payments to suppliers and Her Majesty’s Revenue & Customs.

A former senior RBS insider has alleged that, as the recession hit, staff were tasked with scouring the loan book for businesses that had breached minor lending covenants so the bank could pull the deal and put them into GRG. He said the breaches could be as small as forgetting to file minor financial information.

Tomlinson’s report covers allegations of abuse against all the big banks, but singles out RBS for severe criticism. He accuses the bank of putting firms into GRG for minor setbacks which were “so insignificant, given the otherwise positive performance of the business, that the reaction of the bank can only be considered as utterly disproportionate at best and manipulative and conspiring at worst”.

The bank insists that it has every right to enforce the loan agreements in this way — but there are questions about whether it is appropriate for a taxpayer-owned bank to profit from the distress of small businesses in a downturn.

Whichever way one interprets this 'red in tooth and claw' behaviour, one thing is clear. RBS has behaved in a downright criminal manner, and their own conduct could be used in evidence against them.

In one case of the forcing of a valuable business into receivership, there is documentary evidence available to show that a bank official described how the banks' own property management company, West Register, “would have an appetite for the scheme.”, meaning that they were very anxious to get hold of the property concerned to add to their own portfolio. By forcing the company into threatened bankruptcy, West Register were able to try and buy the property at a considerable under value.

The presence of the word 'appetite' in this state of affairs changes the criminogenic nature of the actions engaged in by the bank, and puts them firmly into the area of the crime of theft.

It proves that the bank was not acting with the sole intention of protecting its loan book, and in circumstances where foreclosure was the only alternative. The word 'appetite' clearly indicates that the bank was anxious to add properties to its own portfolio, and that it would do so at whatever opportunity.

Any criminal investigation of these actions would focus intently on the similar fact evidence demonstrated by the RBS department in the undermining of perfectly solvent businesses by undervaluing their asset base. Such activity is clearly malicious and would go to negative any argument that the bank was acting within the limitations of its legitimate behaviour. The prosecutor would look at the way and the manner of the RBS technique and invite the Jury to infer that there was a 'method' by which RBS enriched themselves at the expense of their clients by holding out loans which they later disclosed on spurious undervaluing of their real worth, with the intention of taking over valuable real estate by a deceit. Such a finding would clearly demonstrate the necessary element of 'dishonesty', so all we need now is a prosecutor with the courage to take on the bank and the relevant directors and executives concerned!

As for the Co-op bank, well, what is there left to say?

A pathetic man who was not a banker (not that that necessarily means a great deal, but it would be nice to have an attempt made to find someone who could read a balance sheet), and whose taste in Class A drugs and exotic young men singled him out as perhaps someone who might not have been entirely 'fit and proper' to have control of a licensed bank.

I don't care personally about his own predilections, my concern is whether or not he is fit to have control of other people's money, and whether his habits may have laid him open to blackmail or unsound commercial judgments. Whatever, this is clearly yet another case where the regulators should hang their heads in shame, because they manifestly failed to undertake any proper due diligence into Paul Flowers' suitability for the post he held.

So, only a few months after the report of the Banking Commission, with the firm undertakings that things were going to be different from now on, we are faced with two more shameful exhibitions of British banking conduct.

The RBS case will limp along until everyone is bored with the issue and another scandal has surfaced to take its place. The best we can do is to keep loudly speaking truth to power and letting them know, in no uncertain terms that we don't accept this kind of behaviour, and that the regulators must stop shilly-shallying around and do something which finally demonstrates that they mean what they say!

Like I said, you couldn't make this crap up!

The criminal history of scandal in UK financial services

"...I`m taking two weeks off from painting to clean the house up and sort out my financial affairs; like the dreadful endowments we took out that have barely reached half their planned targets and the bloody awful Pensions that have been eaten up by fees. And that fucking  `Gan` policy they said was too big to fail . Thieving bastards, I`m pooped already..."

A friend of mine writes a message on a social networking web-page.

A quick phone call elicits that over the years, he has been sold financial products that are not fit for purpose, are not suitable for his needs, and are either diminishing in value, literally in front of his eyes as the fees charged exceed the earnings, or have collapsed because the original company has gone into bankruptcy and other product providers have stepped in and taken over the residual investment fund. They, in turn have mismanaged the fund as well, until there is virtually nothing left of the original investment, which he was told was guaranteed against failure because of its association with a major European investment fund!

My poor friend has been completely and utterly screwed by the sly words and incomprehensible figures produced by the financial product providers, so much so that he now has no relevant investment benefit to look forward to after years of savings, despite adhering to the accepted norms of every element of 'best practice' in the financial investment business, taking independent advice, and being guided by professional advisers as to where to invest his small capital nest-egg!

For many years, the ordinary British people have been the sacrificial victims of the financial services industry. Unlike the USA, where even working-class blue-collar workers will invest in securities, particularly the shares of the company for whom they work, for the vast majority of British people, the idea of buying stocks and shares, or engaging in the act of 'investing' for growth, was not something they did.

The tradition in the UK was that British working people, wherever possible, 'saved' money, hence the popularity of mutually-owned 'building societies' or 'friendly societies'!

One of the most popular methods of saving was through what were termed 'industrial policies', small savings accounts organised and run by insurance companies, into which a working family could put a couple of pence each week. This was 'saving' at a very fundamental level, but it was undertaken for a most fundamental purpose, so that the person whose name was on the policy could bury themselves with dignity. It was the alternative option to being buried in a pauper's grave, at the expense of the Parish.

These were basic ways of putting money away for a rainy day, and they did not involve a great deal of sophistication, and for many years, they were all the market demanded in terms of providing financial services for the poor, and the labouring classes.

The relationship between the City of London and the working populace has always been a tenuous one. It was well known that the ordinary man and woman had access to a significant amount of raw 'cash' which the investment industry wanted to attract for investment purposes, and the City of London had among its members, a large number of insurance companies who were in a position to provide investment services. The real question was how to part the man from his money (so to speak) and get it into the hands of the City.

Thus developed a generation of individuals who promenaded around the hinterland between the City and the residential communities, men and women whose role it was to sell insurance-backed investment services, investment products which were designed and controlled through the insurance market community.

We shall call these people 'Intermediaries'!

They have been defined as; "...An entity that acts as the middleman between two parties in a financial transaction. While a commercial bank is a typical financial intermediary, this category also includes other financial institutions such as investment banks, insurance companies, broker-dealers, mutual funds and pension funds..."

The primary and overriding function of the intermediary was to put together people with money to lend, with people who wished to borrow. The intermediary would be rewarded with a commission payment, usually based upon the value of the amount borrowed. 

The early intermediaries were professionals who acted between fellow professionals, and were therefore deemed to be capable of providing a  good and adequate service to their clients, all of whom knew the ways of the market.

However, all too quickly, the intermediaries became the primary source of investment advice to a vast number of gullible investment 'virgins', ordinary men and women who were venturing, many for the first time, into a financial market, looking for life assurance products, savings facilities, pensions and above all, mortgages.

Suddenly, the financial professionals were dealing with a group of people who had no financial knowledge or expertise whatsoever, and who were literally being led like lambs to the proverbial slaughter in a financial abattoir, from which only the product providers and the intermediaries stood to make a killing!

Most financial products were very carefully designed and calculated by their actuary architects to take the fullest advantage of the existing laws regarding taxation allowances, interest rates, and inflation rates. They were extremely complicated constructs and they needed a great deal of financial knowledge to fully understand their ramifications, and very few of their new clients possessed this knowledge.

In addition, what virtually none of these innocents understood was that the financial sector had no rules or regulations in the early days about what could and could not be said when it came to selling financial products, the only rules which applied were 'caveat emptor'!

The intermediaries were happy to take their new market as they found it, and without any exaggeration, they filled their boots with commissions. Many of them became extremely wealthy from selling their clients financial products which were expensive, and which did not provide value for money. A few of them became spectacularly wealthy, literally millionaires, continuing to make money from treating their clients like mushrooms, selling them financial products which were not in their financial interests, but which no doubt paid significant amounts of sales commission. Some of them, a few, became household names and some, through a series of extremely dubious practices and indeed, downright criminality, made so much money that they became too big to jail!

So, certainly by 1986, the UK was confronted with a new financial market which was ripe for the plucking. A new untried and untested financial regulatory regime, a market competing aggressively for new business,  and a whole new potential reservoir of clients, all anxious to spend the money they were making from their new Yuppie jobs!

The only message was 'sell', 'sell', 'sell', and the army of intermediaries did not need any encouragement to pile into the new opportunities.

I was the Director of Enforcement and Investigations at FIMBRA ( Financial Intermediaries, Managers and Brokers Regulatory Association) for 2 years, the self-regulating organisation which was formed to regulate and supervise the vast army of life assurance and pensions salesmen who wanted to operate on a self-employed basis, as opposed to being employed as 'tied agents' by a specific company of product providers.

This vast mass of financial intermediaries swarmed across the landscape like a plague. They were on every street corner, in shops and small offices. They gave themselves fancy titles, usually with the words 'Financial Services' in the title, and they existed to sell a wide variety of financial products to all and sundry.

This was the important point. As self-employed intermediaries, they were able to act as 'principals' in all contractual matters. They could sell any financial product they wanted, and indeed, one of their required functions as FIMBRA members was to give what was called 'best advice'. This meant that they were required to undertake a full financial fact find of their potential client's means and needs, and then to shop around, using their skill and judgement, to find a product suitable for their client's requirements.

Their duties were to act in the client's best interests, and to subordinate their own interests in the process. Well, that was the legal theory anyway!  Their sales methods relied heavily on amplifying the client's sense of guilt, pointing to pictures of his loving wife and children and appealing to his emotions to think what would happen to them if he were not around to provide for them? If, having identified a product that would meet their client's financial needs, they then found themselves conflicted with another product which would not be so suitable for his requirements, but which paid a higher commission rate, then their legal duty was clear. It was to think of the best interests of the client and to put his interests first, regardless of the fact that they were going to earn less commission.

And if you believe that is what happened, then no doubt you still believe in the tooth fairy, and that the bogeyman lives in a hollow log behind the municipal library!

My time at FIMBRA taught me that the financial intermediaries, for the most part, were among the most unprincipled, and financially insecure practitioners who ever had control of a client's funds. I don't remember many of them walking through my office door when they had to come and see me, most of them just slithered under it!

They flogged dodgy insurance endowment policies, which paid fantastic commission rates, and which were supposed to run, in so many cases, in tandem with a mortgage, so much so that all the time the client was paying his annual premiums into the policy, he was saving to pay off the capital of his principal sum borrowed, 'while gaining the benefit of life cover' as it was always so neatly put!

I could not possibly work out the number of unwitting clients who were bamboozled into an endowment policy insurance backed mortgage, but it was huge. As a young police officer, I myself was one such because when I got married, the Building Society refused me a mortgage loan on the basis that I hadn't been saving with them long enough, but then introduced me to a mortgage broker who just managed to organise a mortgage for me from the same Building Society, coupled with an expensive Endowment Policy, on which he earned a huge sum of commission.

I know, I know, I spent years trying to work out how that particular piece of smoke and mirrors worked, until I realised that I had been simply taken for a schmuck, along with hundreds of thousands of others.

Later, when I came to sell the house and move on, I was told that the existing policy would not cover a new mortgage, and I would need to buy another one. Yes, I know, gullible or what?

Another scam was what became known as 'All of Life' Policies where insurance policies were sold to unsuspecting couples, in which the life of the assured was covered until his death. The figures were so complicated that it was not until some years after starting that the hapless investor realised that his annual premiums were growing at exponential rates, indeed, in so many cases, the product had to be cashed in before fruition because the insured simply couldn't afford to pay the cost of the premiums. The insurance companies had the benefit of literally 'free' cash  for years before the likelihood of having to pay out any benefits, and then the policies were cancelled before the bitter end, literally a licence to print money.

This was followed by the great Pensions swindle when many thousands of workers in occupational pension schemes offering final salary pension benefits, were defrauded out of their original schemes, and encouraged to invest in private 'portable' pensions. These were then raped by the pension providers in terms of costs and fees, so much so that many pensioners ended up with a small percentage of what they had saved. It was at this time that the cruel misnomer 'mis-selling' was first coined.

Unit Trust savings schemes whereby the client's investments (sometimes many thousands of pounds) were placed in the company's bank accounts and never paid over to the Unit Trust company until 6 months after the contracts were opened, leaving the client at huge risk in the event of anything happening to the intermediary. One big company in the West of England specialised in this form of swindle, but proved to be too big to jail when an investigation proved what they had been doing!

Privatised share offerings proved irresistible to some of the big players and some made big fees on supporting these new product opportunities.

PPI insurance policies of course were just another of the scams offered by the intermediaries, and the great problem was that they could and did literally make up any lie or untruth, or misleading statement to give credence to their activities. The difficulty was that until such time as the policy did not pay off or mature in the way in which it was anticipated, no-one could know that the original representations were not truthful.

In these and many other ways too awful to recount, the British people have been routinely screwed and defrauded by the financial salesmen who were so used to lying and misleading their clients, that telling bloody great big untruths simply became a way of business.

This must help to explain why it was that a whole generation of banksters and other financial salesmen found absolutely no difficulty in defrauding customers of PPI policies, interest rate swaps, and other financial products during the run-up to the financial crisis. They were so used to telling lies and defrauding customers that it simply became second nature for them to carry on as before. There was no moral obligation they felt necessary to uphold, there was no ethical environment which made deceiving a customer an anathema!

It amazes me now that anyone would willingly part with their money to any financial intermediary or investment adviser. There is simply no fair and honest market into which the small investor can place his savings, without running the risk of being sold a pup. This should be a matter of significant concern to the Government and the regulators because it means that nowhere is safe for the investor and that means that more and more investors will try and avoid the markets and those financial advisers who serve them. Oh, I am sure there are a few out there who have principles and try to give their clients a fair deal, but I am only really saying this because I don't want to run the risk of receiving a tsunami of complaints from advisers complaining that I have been unfair to them, and traduced their 'fine' reputations. I read those letters before and I didn't believe them then, and I won't believe them now!

I cannot believe that my friend is the only person who has been routinely screwed by his experiences with the investment markets. The worst thing is that he is a man who brings joy to other people's lives as a fine artist, whose paintings are colourful and beautiful, and one of them hangs over my desk. Sadly, this gentle, talented, artistic man is just one, I am convinced, among many hundreds of thousands who have been parted from their savings by unprincipled salesmen and women, unprincipled crooks who have themselves lived a life of luxury, having stolen a great deal of money.

My years at FIMBRA were surreal ones, in the end I found I couldn't stand the complicity and the complacency being demonstrated by those whose jobs were supposed to be aimed at preventing the very scams we were uncovering and then busily covering up. It was an awful time, and one for which I still carry the scars, maybe a tale for another time.

After I left, a friend told me that in my absence, the organisation had attracted a new name, and that FIMBRA was now routinely known as 'Fuck It, My Broker's Run Away'.

The organised criminal London financial market - A Political resignation issue!

A series of recent revelations, not necessarily individually dramatic in themselves, but taken as a whole, begin to define a completely new interpretation of the level of criminality which has infected the financial markets.

The financial crisis opened a Pandora's box of troubles, and among them was the emerging realisation that market practitioners may have been engaging in certain activities, which when viewed through a cynical perspective, might have been construed as criminal.

As more and more facts emerged, it became clearer that what at first might have been called a cynical perspective, was rapidly becoming the only realistic interpretation of the situation. The most important financial markets had become a byword for organised criminality, operated by a gang of men and women to whom the concept of truth and fair dealing had long since ceased to have any meaning.

As each case was uncovered, the more it became obvious that the financial markets were being operated by a group of organised criminal groups, men and women who had formed a series of interlinking social networking, web-driven, communications venues, and who have been using each other to generate financial situations from which one side or other, or indeed, mutually, could profit.

The interesting observation was that in many cases, these market practitioners were working in different financial houses, yet they all appeared to know each other well. To a great extent, we should not be surprised, these markets are small, and local, and the players in this criminal game know each other very well. It pays to make good contacts with others of a similar 'bent', when you set out to manipulate a market, you never know when you may need them!

What is emerging is a recognition that these financial markets have been irresistibly infiltrated by organised criminals - the very phenomenon which we have fought to avoid for so many years, has finally become the reality.

Floyd Norris, who writes the High & Low Finance column for the Friday Business section of the New York Times, has covered the LIBOR scandal in great detail. His words are scarily percipient.

"...The LIBOR market, we now know, was a fraud. There were few — if any — real trades backing the indicator.

A Reuters report states that U.S. and European regulators have fined Dutch lender Rabobank $1 billion (623 million pounds) for rigging benchmark interest rates, making it the fifth bank punished in a scandal that has helped to shred faith in the industry.

Rabobank said on Tuesday it would pay 774 million euros to U.S., British and Dutch regulators after 30 staff were involved in "inappropriate conduct" a  scam to manipulate the London Interbank Offered Rate (Libor) and its Euribor cousin - benchmarks for more than $300 trillion of financial assets

Chief Executive Piet Moerland resigned, saying he was shocked by language revealed in emails exchanged by staff involved over six years to 2011. He acknowledged it would arouse indignation, both within an institution founded as a cooperative and among the public at large.

"Such behaviour is entirely contrary to our core values, of which integrity is the most important," he said.

The scandal surrounding the interbank rates that underpin the demands of global finance has prompted authorities to fine five institutions $3.7 billion to date. They have also charged seven men with criminal offences amid a sprawling, global inquiry that has laid bare the failings of regulators and bank bosses.

Dutch Finance Minister Jeroen Dijsselbloem said Rabobank's "shameless fraud by financiers" was far removed from the cooperative ideals of the lender's founders.

Germany's Deutsche Bank, has yet to reach any regulatory settlements.

Deutsche, Germany's largest bank, set aside an extra 1.2 billion euros on Tuesday to deal with potential litigation costs, while UBS in Switzerland was told to hold extra capital to cover looming liabilities.

In March 2011, Rabobank had told the British regulator its Libor-related systems and controls were "fit for purpose".

The FCA said it had found over 500 instances of attempted Libor manipulation, directly or indirectly, involving at least nine managers and 19 other individuals based across the world.

"Rabobank's misconduct is among the most serious we have identified on Libor," said Tracey McDermott, head of financial crime at the FCA. "This is unacceptable." ( Well, that's one way of putting it, I suppose! Ed.)

The U.S. Justice Department agreed to defer criminal charges against Rabobank for two years, and drop charges if the lender complied with demands to cooperate in investigations.

Although it said no executive board members had been aware of or involved in the misconduct, the board had voluntarily forfeited remuneration worth a total of 2 million euros.

UBS has faced the largest Libor penalty to date. It was ordered to pay $1.5 billion last December and two of its former traders have been charged with taking part in an alleged multi-year scheme to rig rates.

"I wish I could say that this won't happen again, but I can't," noted Gary Gensler, the chairman of the U.S. Commodity Futures Trading Commission (CFTC). "Libor and Euribor are not sufficiently anchored in observable transactions.

"Thus, they are basically more akin to fiction than fact."

Rabobank has showed just how international a fraud this was. The authorities said the fraud was carried out by more than two dozen traders and managers at the bank’s offices in London, New York, Utrecht, Tokyo, Singapore and Hong Kong. The bank’s chairman resigned.

Such a huge market created ample incentives to cheat. Sometimes traders wanted to influence the rate so that their derivatives positions would benefit. Other times banks knew that a lot of loans they had made had interest rates that would reset on a certain day, based on a particular Libor rate. Then they wanted to push that rate up, if only for one day.

At Rabobank, the people who submitted the Libor number each day were not even trained to determine what the real market rate was. If there was no request from someone at the bank to push rates up or down, the submitters were told to just repeat the previous day’s number.

The Libor scandal has now prompted regulators to scrutinise benchmarks across other financial markets, from crude oil and swaps and gold to the $5.3 trillion-a-day foreign exchange market, in an effort to stamp out misconduct. Citigroup and JP Morgan confirmed they were working with regulators, while  Barclays has suspended six traders amid yet another regulatory probe into possible rigging of the foreign exchange market.

Barclays, which is still punch-drunk from a £290million fine for its part in the Libor rigging controversy, is understood to have taken action after being contacted by regulators.

Barclays has reportedly suspended six traders as part of an internal investigation into alleged price fixing within foreign exchange markets. The bank suspended the group, which includes its chief currency trader, in the last 24 hours, according to a report by the Financial Times.

None are thought to have been formally accused of wrongdoing.

In its Q3 results, released on Wednesday, the bank said it is co-operating with the regulator in regards to its foreign exchange trading activities.

"Various regulatory and enforcement authorities have indicated they are investigating foreign exchange trading, including possible attempts to manipulate certain benchmark currency exchange rates," Barclays said.

"The investigations appear to involve multiple market participants in various countries. Barclays Bank has received enquiries from certain of these authorities related to their particular investigations, is reviewing its foreign exchange trading covering a several year period through August 2013 and is cooperating with the relevant authorities in their investigations.

According to the Bank for International Settlements, global foreign exchange activity rose to £3.3 trillion a day this year. Perhaps not surprisingly, London accounts for the bulk of currency trading, with 41% of global turnover in the market, followed by the United States, which has a 19% share, Singapore with 5.7%, Japan with 5.6% and Hong Kong with 4.1%.

Royal Bank of Scotland is also believed to have suspended two traders as part of the investigation, news which came as US banking giants Citigroup and JP Morgan confirmed they were working with regulators as the global probe deepened, and now, HSBC have confirmed that some of their former employees (no longer employed at the bank) have been identified in an investigation.

Both Barclays and RBS declined to comment on the suspensions, but have confirmed they have been drawn into the investigations. Barclays said alongside its trading update on Thursday that it was also co-operating with enquiries from various authorities and was reviewing its foreign exchange trading activities, over a period of several years to August this year.

It first emerged in June this year that regulators were looking into allegations that City traders had rigged foreign exchange rates to boost profits. 

Interestingly, the allegations are believed to involve traders tipping off friends at other banks about foreign exchange deals they were about to make, allowing the other firm to benefit by buying currency at the original price, before the big purchase pushed the price up in the market, a practice known as “front running”, pushing through trades before and during a one minute post-trade window.

RBS said in its third quarter results yesterday that it had been contacted by the UK’s Financial Conduct Authority and other authorities.  “The group is reviewing communications and procedures relating to certain currency exchange benchmark rates as well as foreign exchange trading activity and is cooperating with these investigations. At this stage, the group cannot estimate reliably what effect, if any, the outcome of the investigation may have on the group.”

Ross McEwan, RBS chief executive, refused to comment on the case, but said it will “come down very severely on anyone we discover has been breaking the rules”.

What all this frenzied regulatory information requesting and these related investigations reveal, more clearly than any findings may later be allowed to demonstrate, is that the world's financial benchmark markets have been controlled and managed by organised criminal elements for many years.

The very fact that these traders can behave in a way which demonstrates such inter-related conduct, coupled with such a cavalier disregard for the possible outcomes of their activity, identifies a level of criminal dysfunction which has developed far and beyond the reach of any regulatory imagination.

These markets have been allowed to get to these criminogenic dimensions because their practitioners have operated in an atmosphere of regulatory anomie - as far as they were concerned, there were no rules - because that is the message that years of regulatory neglect and failure has inculcated.

I have been a regulator, back in the early days. I know how hard it is to go after the big players and enforce your will on them, but it has got to be done, and they have to be brought to heel. Otherwise they will know that you can't walk the talk, and they will just ignore your worst threats, and carry on flouting all the rules.

This is the climate of 'anything goes' which is inevitably created when the worst that can happen to a bank, even after the most egregious criminal conduct is identified, is that it gets a fine. The regulators do not and never have understood that fines, no matter how big, are simply not an effective punishment. The banks don't care about them, because they always fall on the shoulders of the shareholders, and as long as no-one in senior management gets called to account, and stuck in the dock, then nothing will ever happen.

Oh a few small traders will be relocated to other houses and fitted in to other teams and allowed to carry on trading, and after that, it's business as usual!

How can the UK Government continue to insouciantly maintain that everything in  the regulatory garden is rosy and that all is for the best in the best of all possible worlds? Maintaining this fiction is the worst kind of complicity! It tells the markets what they want to hear!

These markets have lost any credibility they might ever have hoped to possess. Why would anyone be willing to put their savings into this mafia-run sink, in the hope that they might get something in return? These are among the most important markets in the world, and if these are run by the crims, then what hope do the rest of us have.

This is such a serious problem and the potential for the investment markets so severe, that I believe it has now reached the stage where it is a political resignation issue. Ultimately, these markets are regulated by agencies, but in the UK, those financial agencies all have to answer to the Treasury, and if George Osborne cannot demonstrate that he has the guts and the clout to kick the crooks out of these benchmark markets, then he had better resign, and let someone else in to do the job.

I am terribly serious about this. Osborne will know what is being alleged in these markets, and he will know that the vast bulk of this dirty, shoddy business is being run through London. He needs to grab hold of Boris Johnson, who is so keen on trumpeting the integrity of the London Markets, and the DoPP, and the SFO and tell them that they have got to put a halt to this climate of crime, once and for all, whatever it takes.

It means that heads are going to have to roll in EC3, some firms will have to go the wall, but the Politicians have got to demonstrate some guts to put an end to this shameless criminality.

They have got to be made to realise that they are paying the price for years of regulatory shilly-shallying, for cosy regulatory capture, while the chaps at the top of the gilded pile took it in turns to regulate their mates, in a cosy cabal which sent all the wrong messages to the spivs and wide-boys on the trading floors.

If they can't do the job, then they had better get out of the way and let the Americans take over and do it, because my contacts in the USA tell me that the US regulatory agencies are simmering with regulatory indignation, and are looking for scalps.

When announcing the CFTC’s enforcement action that requires UBS to pay a $700 million penalty for unlawful conduct related to LIBOR, Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler made the following simple statement;

“...Falsely reported LIBOR and other benchmark rates undermine the integrity of markets and shake the public’s trust in our financial system. These rates are at the absolute core of our economy. Banks must not falsely report rates to protect their reputation, or try to manipulate benchmarks to increase trading profits.

“Regrettably, with the announcement today of the CFTC findings against UBS, we have yet another blatant example of what bad actors can do when a benchmark rate's underlying market becomes virtually nonexistent.

“I believe that to ensure that a benchmark rate is reliable and has integrity, it should be anchored in real, observable transactions. When a benchmark is separated from real transactions, it is vulnerable to misconduct.

“Benchmark rates should be an honest reflection of market prices. Whether taking out a student loan, a small business loan or a mortgage, or putting savings in a money market fund, the American public depends on the honesty of benchmark rates.

“The CFTC will continue to use vigorously our enforcement and regulatory authorities to protect the public, promote market integrity and ensure that these rates are free of false information and manipulation.

“We are committed to the ongoing international efforts to develop benchmark rates that best serve the public as honest and reliable reflections of the underlying markets to which they refer..."

Now, when will George Osborne come out and say something like that?