HSBC chiefs charged with rigging forex market, one already arrested

HSBC chiefs charged with rigging forex market, one already arrested

- in All News, Forex Brokers

Mark Johnson, global head of foreign exchange trading of HSBC, was arrested on Tuesday as he was about to board a plane from New York to London, reports BBC. After a court hearing where he was accused of front running by using inside information to profit from a major currency deal, he was released on $1 million bail.

Mark Johnson and a former colleague of his, Stuart Scott (HSBC’s European head of foreign exchange trading in London until December 2014), who is still at large, are accused of rigging the forex market in order to bring profit for themselves and HSBC back in 2011. The two have allegedly bought British pounds, knowing a client of the bank was about to convert $3.4 billion into British pounds.

Johnson and Scott bought pounds in a manner “designed to spike the price” before executing the client’s order and made a profit of $3 million. They also billed the client additional $5 million as a fee for their services. Furthermore, the two bankers lied to the client when he asked about the higher price of the pound.

“The defendants allegedly betrayed their client’s confidence, and corruptly manipulated the foreign exchange market to benefit themselves and their bank,” said the US assistant attorney general Leslie Caldwell, quoted by The Guardian daily.

Meanwhile, HSBC refused to comment on the individual actions of its employees and the ongoing litigation, but said it is fully cooperating the US Department of Justice and the FBI. “HSBC has been and continues to cooperate with the DOJ’s FX investigation,” said Rob Sherman, a spokesman for HSBC.

This is by far not the first time large banks or top bankers have been caught red-handed. Back in 2015 five major global banks Citigroup, JPMorgan Chase, Barclays Plc, UBS and Royal Bank of Scotland, were accused by UK and US authorities of “brazenly cheating clients to boost their own profits”. According to the accusations, bank employees were using private chat rooms and coded messages to coordinate their trades and rig the forex market, which is valued at $5 trillion a day.

All but UBS pleaded guilty at conspiring to manipulate the USD and EUR prices on the forex spot market and paid a fine of nearly $6 billion. UBS pleaded guilty to another charge.

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