Former HSBC Holdings' executive found guilty in $3.5-bn currency trade
24 October 2017
A US jury yesterday found a former HSBC Holdings executive guilty of defrauding Cairn Energy in a $3.5-billion currency trade in 2011.
According to US prosecutors, Mark Johnson formerly head of HSBC's global foreign exchange cash trading desk, schemed to increase the price of British pounds before executing a trade for Cairn, and in the process made millions for HSBC at the expense of Cairn.
''They've convicted an innocent man,'' John Wing, a lawyer for Johnson, told reporters as he left the courtroom in Brooklyn federal court, where Johnson was on trial for nearly four weeks.
Johnson, a 51-year-old UK citizen, becomes the first banker to be tried in the US as a result of worldwide investigations into the multi-trillion-dollar per day currency market.
The investigation has resulted in fines of around $10 billion against several banks and the firing of dozens of traders.
Court filings show Cairn Energy hired HSBC in 2011 to convert $3.5 billion into UK pounds sterling in connection with the sale of its Indian subsidiary.
According to prosecutors, Johnson and another former HSBC executive who is also facing charges, Stuart Scott, devised a plan to drive up the price of pounds by executing a series of trades before carrying out the trade for Cairn.
The United States Department of Justice said in a news release, "The head of global foreign exchange cash trading at HSBC Bank plc, a subsidiary of HSBC Holdings plc (collectively HSBC), and HSBC's former head of foreign exchange cash trading for Europe, the Middle East and Africa, were charged with conspiring to defraud a client of HSBC through a scheme commonly referred to as ''front running.''
US attorney Robert L Capers of the Eastern District of New York, assistant attorney general Leslie R Caldwell of the justice department's Criminal Division, acting inspector general Frederick W Gibson of the Federal Deposit Insurance Corporation (FDIC), and assistant director in charge Paul M Abbate of the FBI's Washington Field Office, made the announcement.