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Bank of England investigates staff over auctions - FT

LONDON (Reuters) - The Bank of England is investigating whether staff knew or even aided possible manipulation of auctions it held at the onset of the financial crisis to pump liquidity into the banking system, the Financial Times reported.

The newspaper said the formal probe began during the summer and the central bank had asked the British lawyer who looked into the BoE's role in a foreign exchange scandal to head the new investigation.

A BoE spokesman said he could not comment on the details in the report.

"If the bank were conducting an investigation or review of any of its activities, as it does from time to time, it would be wholly inappropriate to provide a running commentary via the press," the spokesman said.

"I can tell you that no actions have been taken or are currently being contemplated against any employee of the Bank."

The FT, quoting people familiar with the situation, said the investigation would look into whether BoE money-market auctions in late 2007 and early 2008 were rigged, and whether officials were party to any manipulation.

Around 10 Bank staff have been interviewed as part of the probe and have been provided with defence lawyers at the expense of the BoE, the FT said.

The report comes little more than a week after an investigation, headed by lawyer Anthony Grabiner and commissioned by the Bank's oversight committee, found no evidence that any BoE official had been involved in improper behaviour in relation to a foreign exchange trading scandal.

The FT said Grabiner had been asked to conduct the new investigation which it said was taking place.

The Bank dismissed its chief foreign exchange dealer last week, saying it found information about serious misconduct but stressed it was unrelated to the foreign exchange scandal.

(Writing by William Schomberg; Editing by Janet Lawrence)