image

HSBC

Ex-HSBC executive sentenced to two years in jail for fraudulent foreign exchange scheme

The former head of the bank’s global foreign exchange cash trading desk was also ordered to pay a US$300,000 fine

PUBLISHED : Friday, 27 April, 2018, 3:01am
UPDATED : Friday, 27 April, 2018, 3:28am

A former HSBC Holdings executive was sentenced to two years in prison on Thursday after he was found guilty by a jury of defrauding Cairn Energy in a US$3.5 billion currency trade in 2011.

Mark Johnson, formerly head of HSBC’s global foreign exchange cash trading desk, was sentenced by US District Judge Nicholas Garaufis in Brooklyn, New York. He was also ordered to pay a US$300,000 fine.

Lawyers for Johnson could not immediately be reached for comment.

Johnson, a 52-year-old British citizen, was convicted of fraud in October after a nearly four-week trial. He was the first banker to be tried in the United States as a result of worldwide investigations of the multi-trillion-dollar per day currency market.

The inquiries have led to about US$10 billion in fines against several banks and the firing of dozens of traders.

According to court filings, Cairn hired HSBC in 2011 to convert US$3.5 billion into British pounds sterling in connection with the sale of an Indian subsidiary.

HSBC to pay US$100m to end US currency-rigging probe

Prosecutors said that Johnson and another former HSBC executive who is also facing charges, Stuart Scott, devised a scheme to drive up the price of pounds by executing a series of trades before carrying out the trade for Cairn.

Such trading in advance of a client’s order to make a profit is known as “front-running”.

During the trial, jurors heard numerous tape-recorded phone calls between Johnson and others discussing the trade.

In one call, Scott and Johnson told Cairn and its financial adviser after the trade that a “Russian buyer” had been responsible for a spike in the price of pounds. Prosecutors said that was a lie.

Scott, who was HSBC’s former head of cash trading for Europe, the Middle East and Africa, remains in Britain. A London judge ruled in October that he be extradited to the United States to face charges, which Scott said he would appeal.

Johnson left HSBC in 2017 before his trial, and Scott left in 2014, an HSBC spokesman said.