A senior HSBC banker has been arrested in London as he was charged in the United States with fraudulently rigging a multi-billion dollar currency exchange deal.
Stuart Scott, HSBC’s European head of foreign exchange trading in London until December 2014, and a colleague are accused of defrauding clients and alleged to have “corruptly manipulated the foreign exchange market to benefit themselves and their bank”.
Stuart was arrested last week shortly after he was released on bail by a London court on Wednesday.
A second Briton, Mark Johnson, who was HSBC’s global head of foreign exchange trading, is accused of the same crimes.
ACY Securities Supports ASIC’s Product Intervention OrderGo to article >>
Johnson and Scott are alleged to have “placed personal profits ahead of their duties of trust and confidentiality owed to their client, and in doing so, defrauded their client of millions of dollars”.
The men made $3 million profit by trading currencies in advance of a client buying $3.4 billion worth of UK pounds in 2011. They are accused of buying sterling in advance of the client’s transaction in a manner designed to spike the price to the benefit of HSBC although they already billed their client $5 million in fees for their work.
Johnson and Scott are the first executives to be charged in connection with the US’ long-running investigation into bankers’ alleged rigging of the currency market.
US assistant attorney general Leslie Caldwell said: “The defendants allegedly betrayed their client’s confidence, and corruptly manipulated the foreign exchange market to benefit themselves and their bank. This case demonstrates the US Department of Justice’s criminal division’s commitment to hold corporate executives, including at the world’s largest and most sophisticated institutions, responsible for their crimes.”
HSBC is also bracing itself in anticipation of new claims amounting to several millions of pounds over foreign exchange manipulation, after a fresh class-action lawsuit was triggered by ECU Group, a UK-based currency investment firm, according to the Financial Times.