US claims currency conspiracy in HSBC may involve up to 11 bank employees
A foreign exchange front-running scheme at HSBC Holdings Plc may have involved at least 11 bank employees beyond the two executives who have been charged with crimes, a prosecutor said on Monday.
Mark Johnson, HSBC’s global head of foreign exchange cash trading in London, is expected to go on trial September 18 in New York, accused of illegally using his knowledge to profit from a pending US$3.5 billion currency transaction in 2011.
In a case that is the first of its kind to be brought by the US, prosecutors said Johnson, and Stuart Scott, the bank’s former head of currency trading in Europe, conspired to take advantage of confidential information about an unidentified company’s plans to sell part of its stake in an Indian subsidiary and convert the proceeds from dollars to pounds.
Prosecutors have said both men and unidentified “others” bought pounds in the days before the transaction. On Monday, they specified how many may have participated.
“We’ve identified at least 11 traders who put on positions based on inside information,” Brian Young, a Justice Department lawyer told US District Judge Nicholas Garaufis. “Our allegation is Mr Johnson tipped off other traders at the bank who also traded. ”
Melissa Cassar, a spokeswoman for HSBC, declined to comment.
Johnson and Scott are accused of taking positions anticipating that the conversion trade for the company would cause the price of pounds to increase in a practise known as “ramping,” according to the indictment. Johnson is accused of reaping US$8 million in profit for the bank.
The government may introduce the evidence of additional traders at Johnson’s trial. His comments came after Johnson’s lawyer, Frank Wohl, asked for a delay, arguing the government just turned over about 3,400 pages of evidence and data concerning at least 10,000 transactions that would take time to evaluate.
Garaufis said he was “disinclined” to delay the trial and asked Wohl to submit papers explaining his request. Wohl did not immediately return a voicemail message seeking comment.
Johnson, who was as arrested in July 2016 at New York’s Kennedy airport as he was about to board a plane for the UK, pleaded not guilty. Scott, a UK resident, was arrested in June at his home in suburban London and is fighting extradition.
While the US did not identify the client company in the indictment against Johnson and Scott, it was Cairn Energy Plc, which was selling the unit to Vedanta Resources Plc, according to court papers filed by Wohl.