Britain’s Serious Fraud Office Joins Extensive Foreign-Exchange Inquiry

LONDON — Britain’s Serious Fraud Office, which investigates and prosecutes fraud and corruption, joined other global regulators on Monday in investigating accusations of abuse in the multitrillion-dollar foreign exchange market.

The criminal inquiry will focus on accusations against various employees at banks and other financial institutions, according to a person briefed on the investigation but not authorized to speak publicly.

The Financial Conduct Authority, a separate agency that regulates the financial services sector, has been investigating potential misconduct in the $5.3 trillion-a-day foreign exchange market since April 2013. Its investigation has broadened as it has collected information.

Regulators in the United States and Britain have noted that deciphering the evidence they have collected has posed various challenges. For example, foreign exchange traders — like any group of traders — have their own vernacular. One American regulator said his office had to bring in “translators,” or traders who could help to decipher chat room messages. “It’s certainly slowed things down a bit,” he said earlier this year.

More than two dozen traders on four continents have been placed on leave or fired as a result of internal investigations at several large financial institutions involved in foreign exchange trading, including Barclays and JPMorgan Chase.

Citigroup and Deutsche Bank, two of the biggest companies in the foreign exchange market, have each fired employees as a result of their own investigations. The Bank of England has also suspended an employee as it continues an internal review into whether central bank officials knew of or condoned manipulation of the currency markets.

Neither the banks nor any of the suspended or fired traders have been accused of wrongdoing by the authorities.

David Green, head of the Serious Fraud Office, told The New York Times in June that it was receiving “extensive and complex” data regarding the manipulation of foreign exchange rates.

Martin Wheatley, chief executive of the Financial Conduct Authority, has previously said the evidence looked as bad as that in the separate investigation into efforts to rig the London interbank offered rate, or Libor, a benchmark interest rate. That investigation has yielded billions of dollars of fines from banks over the last two years.

Marshall Bailey, president of ACI International, the trade association for the international foreign exchange markets, called for caution as regulators moved to reform potentially problematic markets.

“The best form of regulation for a market like FX is self-regulation, because you will never have a standardized set of regulations globally,” he said. He called for efforts to “educate participants fairly and uniformly with codes of conduct.”

This month, the Financial Stability Board said it was preparing to recommend that the window for determining benchmark currency rates be widened, as part of a series of proposals to potentially reshape foreign exchange markets.

A spokeswoman for the Serious Fraud Office declined to comment on the timing of the investigation and whether the office has sufficient funding. The office operates on a shoestring budget. At 38 million pounds, it is 7 percent lower than the £41 million it had in 2008-9 (Credit Suisse spent 169 times that on compensation in 2013).

Recently, the fraud office needed to request an extra £24 million in so-called blockbuster funding to help pay for some of its complex investigations.

“The S.F.O. has very limited resources. For large investigations, it has to obtain extra blockbuster funding,” said Barry Vitou, head of corporate crime and investigations at Pinsent Masons, a British law firm.

Mr. Green has noted the challenges of going against companies with deep pockets.

“Large banks have a legal spend approaching a billion,” he said in the interview in June. “If you look at the size of the white-collar criminal legal sector in London, it’s huge. That would suggest there is far more work out there than we are doing.”