Top HSBC executive arrested in US over forex trades

0

NEW YORK: US prosecutors announced charges Wednesday against two top HSBC executives over a fraudulent foreign exchange trading scheme that netted some $8 million at the expense of a bank client.

Mark Johnson, the head of global foreign exchange cash trading, was arrested at John F. Kennedy international airport Tuesday night in New York, the Justice Department said.

Johnson was released Wednesday afternoon on a $1 million bond, according to a person familiar with the case.

US officials also charged Stuart Scott, HSBC’s former head of foreign exchange cash trading for Europe.


The Justice Department said the bank was hired in 2011 by a client to convert some $3.5 billion in proceeds from the planned sale of a foreign subsidiary into British pounds.

Knowing about the confidential plan, Johnson and Scott allegedly engaged in “front-running” the client’s trade — purchasing pounds for HSBC’s accounts which they held until the mammoth client order went through.

They also caused the $3.5 billion transaction to be executed in a way that would spike the price of pound, benefiting HSBC at the client’s expense, the Justice Department said.

“As alleged, the defendants placed personal and company profits ahead of their duties of trust and confidentiality owed to their client, and in doing so, defrauded their client of millions of dollars,” said US Attorney Robert Capers.

“When questioned by their client about the higher price paid for their significant transaction, the defendants wove a web of lies designed to conceal the truth and divert attention away from their fraudulent trades.”

The arrests follow major enforcement cases against big banks over rigging of the foreign exchange market.

HSBC was one of six major US and European banks that were fined a total $4.2 billion by global regulators in a November 2014 crackdown for attempted manipulation of the foreign exchange market.

In May 2015, US and British regulators fined six major banks a total of nearly $6 billion for rigging foreign exchange market and Libor interest rates. HSBC was not among the banks in that agreement. AFP

afp/bf

Share.
.
Loading...

Please follow our commenting guidelines.

Comments are closed.