Written by Keshala Dias
18 Sep, 2017 | 8:56 pm
A former high-ranking HSBC Holdings Plc Executive from Britain is the first person to go to trial on charges stemming from a U.S. probe into foreign exchange rate manipulation. Selection of jurors for the trial of Mark Johnson, a 51-year-old British citizen, began in Brooklyn New York, today.
Johnson, who was HSBC’s Global Head of Foreign Exchange Cash Trading, has pleaded not guilty to wire fraud and conspiracy charges.HSBC spokesman, Robert Sherman, said, Johnson left the bank earlier this year and that the case will be against Johnson, not HSBC.
A lawyer for Johnson could not immediately be reached.
The case came in the wake of worldwide investigations that have resulted in about $10 billion in fines for several large banks and the firing of dozens of traders.
In 2011, Johnson and another HSBC Executive, Stuart Scott, misused information from a client that hired the bank to convert $3.5 billion into British pounds as part of the client’s planned sale of foreign subsidiaries, according to U.S. prosecutors.
Armed with knowledge of the deal, Johnson and Scott entered into foreign currency transactions that caused the price of pounds to spike, generating more profit for HSBC while hurting the client, prosecutors said. Transactions that are based on advance knowledge of a deal are known as “front-running.”
The client was not named in court papers, but a source has said it was British oil firm Cairn Energy Plc.
HSBC earned $3 million in total from Johnson and Scott’s foreign currency transactions, and $5 million from executing the deal for the client, prosecutors said.
Scott, who was HSBC’s Head of Cash Trading for Europe, the Middle East and Africa, lives in the United Kingdom, and U.S. authorities are seeking his extradition.
Scott left HSBC in 2014, according to Sherman, the bank’s spokesman. However, Scott has denied the accusations. His lawyers could not be reached immediately for comment.
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