A couple of senior HSBC bankers have been barred by the Federal Reserve Board from entering the banking industry as they were charged with fraudulently rigging a multibillion-dollar forex transaction.
Mark Johnson, HSBC’s global head of FX cash trading, and his colleague Stuart Scott, head of foreign exchange trading in Europe, the Middle East and Africa, are accused of defrauding an FX client of HSBC. They are alleged to have corruptly manipulated a large pre-arranged currency transaction to benefit themselves and their bank. More specifically, the two allegedly conspired to take advantage of inside information, making $3 million profit by fraudulently trading currencies in advance of a client buying $3.4 billion of pounds sterling in 2011.
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According to the complaint, the Fed board found that: “Given the indictment, Johnson’s and Scott’s continued participation in any depository institution may threaten to impair public confidence in that institution. The prohibition is effective until the criminal charges against Johnson and Scott are resolved or disposed of.”
Johnson and Scott are the first ‘real’ people to be charged in connection with the watchdog’s long-running investigation into bankers’ alleged rigging of the forex market.
Last year, four banks – Barclays, Royal Bank of Scotland, Citigroup and JP Morgan Chase – pleaded guilty to conspiracy to rig the forex market and fines totalling $5.6 billion were handed down. HSBC was not included in the settlement deal. However, the UK-based bank has incurred almost $13 billion in legal bills and fines over the past five years.