Former Global Head Of HSBCs Foreign Exchange Cash-Trading Found Guilty Of Scheme

https://www.justice.gov/usao-edny/pr/former-global-head-hsbc-s-foreign-exchange-cash-trading-found-guilty-orchestrating

Department of Justice
U.S. Attorney’s Office
Eastern District of New York

FOR IMMEDIATE RELEASE
Monday, October 23, 2017

Former Global Head Of HSBC’s Foreign Exchange Cash-Trading Found Guilty Of Orchestrating Multimillion-Dollar Front-Running Scheme

BROOKLYN, N.Y. – Mark Johnson, the former head of global foreign exchange cash trading at HSBC Bank plc, a subsidiary of HSBC Holdings plc (collectively HSBC), was found guilty today for his role in a scheme to defraud an HSBC client through a multimillion-dollar scheme commonly referred to as “front running.”
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As established by the evidence presented by the government at trial, HSBC was selected to execute a foreign exchange (FX) transaction related to a planned sale of one of a client’s foreign subsidiaries – which would require converting approximately $3.5 billion in sales proceeds into British Pounds Sterling. HSBC’s agreement with the client required the bank to keep the details of the planned transaction confidential. Instead, Johnson defrauded the client out of millions of dollars by misusing that confidential information.

Shortly before the transaction, which occurred in December 2011, Johnson and other traders acting under his direction purchased Pounds Sterling for their own benefit in their HSBC “proprietary” accounts. Johnson then caused the $3.5 billion foreign exchange transaction to be executed in a manner that was designed to “ramp,” or drive up, the price of the Pounds Sterling, benefiting their proprietary positions and HSBC at the expense of their client.

As part of their scheme, Johnson and his co-conspirators made misrepresentations to the client about the transaction that concealed the self-serving nature of their actions. In total, Johnson and the traders he supervised generated HSBC profits of roughly $7.3 million from the execution of the FX transaction for the victim company.
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