BRITAIN's financial regulator is expected to shortly draw a line under its inquiry into the stock market manipulation of HBOS's share price, which saw 20 per cent wiped off the bank's value in just one morning three months ago.
It is understood the Financial Services Authority inquiry into the events of 18 March has not turned up any hard evidence on which to prosecute.
The investigation into a "shorting" raid on HBOS's shares – meant to drive the price lower in order
to buy later at the reduced cost – included the FSA examining thousands of e-mails and phone records at leading investment banks.
A spokesman for HBOS, the Halifax/Bank of Scotland group, yesterday declined to comment as did the FSA. However, it is believed that the bank – currently in the throes of getting away a £4 billion rights issue – has heard nothing about a conclusion of the investigation by the regulator.
Despite this, the FSA believes its inquiry has had the salutary effect of preventing similar-scale reruns at other leading banks. "It probably has acted as a prophylactic so the exercise has not been useless," one analyst said.
On the morning of the "raid" on HBOS shares, wild rumours swept the market that the falling price was due to it going to the Bank of England for emergency funding. This was categorically denied by HBOS as "rubbish".
There was also a rumour, subsequently denied, that the Governor of the Bank of England, Mervyn King, had cut short a trip to the Far East to return to deal with the crisis.
The full article contains 270 words and appears in The Scotsman newspaper.
