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| HSBC Bankers Face Charges in $3.4 Billion Currency Case | HSBC Bankers Face Charges in $3.4 Billion Currency Case |
| (about 1 hour later) | |
| Federal prosecutors have charged two HSBC bankers with fraud in connection with a $3.4 billion foreign exchange transaction in 2011. | Federal prosecutors have charged two HSBC bankers with fraud in connection with a $3.4 billion foreign exchange transaction in 2011. |
| Mark Johnson, the global head of HSBC’s foreign exchange cash trading desk, and Stuart Scott, the former head of the bank’s Europe desk, were charged with wire fraud conspiracy related to the currency transaction, which involved exchanging dollars for British pounds on behalf of an oil and gas company. Though unnamed in the complaint, the company is Edinburgh-based Cairn Energy, according to a person with direct knowledge of the case who was not authorized to speak publicly. | |
| Mr. Johnson, 50, who is a British citizen and a resident of London and New York, was arrested by federal agents Tuesday night at Kennedy International Airport as he was boarding a flight to London. Mr. Johnson is expected to appear before a federal court in Brooklyn Wednesday afternoon. Mr. Johnson’s lawyer did not respond to a request for comment. Mr. Scott’s whereabouts are unknown, and it was unclear who his lawyer is. | |
| Federal prosecutors contend that Mr. Johnson and Mr. Scott, who is 43, used the information about their client’s currency transaction to trade ahead, pocketing a $3 million profit for the bank. The bank also made $5 million in fees from the transaction. The transaction was undertaken following the sale of Cairn’s India subsidiary to Vedanta, which is owned by the mining magnate Anil Agarwal. | |
| “The defendants placed personal and company profits ahead of their duties of trust and confidentiality owed to their client, and in doing so, defrauded their client of millions of dollars,” Robert L. Capers, the United States attorney for the Eastern District of New York, said in a statement. | “The defendants placed personal and company profits ahead of their duties of trust and confidentiality owed to their client, and in doing so, defrauded their client of millions of dollars,” Robert L. Capers, the United States attorney for the Eastern District of New York, said in a statement. |
| Leslie R. Caldwell, the head of the Justice Department’s criminal division, said, “The defendants allegedly betrayed their client’s confidence, and corruptly manipulated the foreign exchange market to benefit themselves and their bank.” | Leslie R. Caldwell, the head of the Justice Department’s criminal division, said, “The defendants allegedly betrayed their client’s confidence, and corruptly manipulated the foreign exchange market to benefit themselves and their bank.” |
| A spokesman for HSBC, which is based in London, declined to comment. | A spokesman for HSBC, which is based in London, declined to comment. |
| In 2014, HSBC was one of five banks to reach a combined $4.25 billion settlement with United States, British and Swiss regulators over accusations that the banks had conspired to manipulate currency rates. | In 2014, HSBC was one of five banks to reach a combined $4.25 billion settlement with United States, British and Swiss regulators over accusations that the banks had conspired to manipulate currency rates. |