EU Said to Investigate Possible Rigging of Agency-Bonds

  • U.S. Justice Department and U.K.'s FCA also investigating
  • Probes focus on supranational, sub-sovereign and agency bonds

The European Union is investigating possible manipulation of agency-bond trading, joining agencies in the U.S. and U.K. already looking into the $9 trillion market, according to a person familiar with the matter.

EU regulators sent requests for information last year following the opening of a criminal probe by the U.S. Justice Department into supranational, sub-sovereign and agency bonds, known as SSAs, according to the person, who asked not to be identified because the probe is confidential. The U.K. Financial Conduct Authority is also looking into the matter.

Agency bonds are issued by government-sponsored entities such as the U.S. Postal Service, Freddie Mac, and the World Bank. The Justice Department investigation has focused on activity by London-based traders in the debt instruments, people familiar with the matter told Bloomberg News in December. The U.S. prosecutor and the FCA are both looking at whether traders at different banks coordinated decisions on who would offer price quotes to potential buyers and sellers.

Four traders from the London branches of Bank of America Corp., Credit Agricole SA, Nomura Holdings Inc., and Credit Suisse Group AG are among those being probed.

The bond market is the latest area to come under scrutiny by global authorities. The EU fined financial firms 1.7 billion euros ($1.9 billion) over Libor manipulation in 2013, a portion of the $9 billion in fines that were issued by agencies worldwide over the scandal. It is also currently investigating banks over spot-trading for precious metals and foreign-exchange trading, for which U.S., U.K. and Swiss authorities have already levied about $10 billion in penalties.

Ricardo Cardoso, a spokesman for the European Commission, declined to comment. The Financial Times reported the EU investigation earlier.

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