Tuesday, October 24, 2017

Former Global Head of HSBC's Foreign Exchange Cash-Trading Found Guilty



Department of Justice
Office of Public Affairs

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

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.” 

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York, Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation (FDIC) and Assistant Director in Charge Andrew Vale of the FBI’s Washington Field Office made the announcement. 

Mark Johnson, 51, a United Kingdom citizen with residences both in the U.K. and the United States, was found guilty after a four-week jury trial of one count of conspiracy to commit wire fraud and eight counts of wire fraud. Sentencing date has not been scheduled. U.S. District Judge Nicholas G. Garaufis of the Eastern District of New York presided over the trial. Johnson was arrested on a criminal complaint in July 2016 and indicted in August 2016.

“This verdict makes clear that the defendant corruptly manipulated the foreign exchange market for the benefit of his bank and his bonus pool, to the detriment of the bank’s client,” said Acting Assistant Attorney General Blanco. “This case demonstrates the Criminal Division’s commitment to protecting the financial system from harm, and holding corporate executives, including at the world’s largest and most sophisticated financial institutions, responsible for their crimes.”

“The jury found that former HSBC banker Mark Johnson exploited confidential information provided by a client of the bank to execute trades that were intended to generate millions of dollars in profits for him and the bank at the expense of their client,” said Acting U.S. Attorney Rohde. “This Office, together with its law enforcement partners, will continue to vigorously investigate and prosecute those who would so abuse their client relationships and, more generally, undermine public confidence in the operation of the financial markets by engaging in fraudulent schemes.”

“This case involved a complex fraud scheme to ‘front run’ a foreign exchange transaction in order to generate millions of dollars in illicit profits for HSBC, which also indirectly benefited individual traders,” said Inspector General Lerner. “Such cases are challenging, but important, to bring against bank insiders who misuse their positions and undermine the integrity of a major international financial institution.”

“Mark Johnson misused confidential information to manipulate currency prices and defrauded a client out of more than $7 million,” said Assistant Director in Charge Vale. “The American people need to be assured that we are working vigorously to ensure integrity is upheld in financial services industries. We will continue to work with our law enforcement partners to investigate and prosecute those who engage in illegal business practices.”

According to the evidence presented at trial, in November and December 2011, Johnson cheated an HSBC client out of millions of dollars by misusing information provided to him by a client that hired HSBC to execute a foreign exchange transaction related to a planned sale of one of the client’s foreign subsidiaries. HSBC was selected to execute the foreign exchange transaction – which was going to require converting approximately $3.5 billion in sales proceeds into British Pound Sterling – in October 2011. HSBC’s agreement with the client required the bank to keep the details of the client’s planned transaction confidential. Instead, Johnson misused confidential information he received about the client’s transaction to cheat the client out of millions of dollars, the evidence showed. 

Shortly before the transaction, which occurred in December 2011, Johnson and other traders acting under his direction purchased Pound 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 Pound 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 $7.5 million from the execution of the FX transaction for the victim company. 

The investigation was conducted by the FDIC’s Office of Inspector General and the FBI’s Washington Field Office. The Criminal Division’s Office of International Affairs provided significant support. Assistant Chiefs Carol Sipperly and Brian Young and Trial Attorney Blake Goebel of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Lauren Elbert of the Eastern District of New York’s Business and Securities Fraud Section are prosecuting the case.

The Fraud Section plays a pivotal role in the Department of Justice’s fight against white collar crime around the country, focusing on cases of national significance and international scope. Fraud Section prosecutors have vast experience in investigating and prosecuting securities and financial fraud, health care fraud and foreign corruption. The Section is routinely the national leader in large, sophisticated white collar investigations and prosecutions, frequently in partnership with U.S. Attorneys’ Offices and in coordination with foreign law enforcement agencies. Learn more about the Criminal Division’s Fraud Section at: https://www.justice.gov/criminal-fraud.

Component(s): 
Criminal Division
USAO - New York, Eastern

Press Release Number:
17-1181

Updated October 23, 2017


https://www.justice.gov/opa/pr/former-global-head-hsbcs-foreign-exchange-cash-trading-found-guilty-orchestrating

    
    

1 comment:

marie said...

GOOD....HANG EM ALL HIGH AND TIGHT! I HAVE HAD IT WITH THE CORPORATIONS STEALING AND THIEVING FROM THE AMERICAN PEOPLE AND THE PEOPLE OF THE REST OF THE WORLD.

HERE IS MY MESSAGE TO NESTLES WHO IS BASED OUT OF SWITZERLAND (ANOTHER FOREIGN CORPORATION) AND HAVE A HEADQUARTERS IN NEBRASKA. THIS MESSAGE IS ALSO FOR OUR ATTORNEY GENERAL BILL SHUETTE, WHOM I BROUGHT THIS THEFT OF WATER TO YOUR ATTENTION FACE TO FACE AND IT WAS WRITTEN DOWN ALONG WITH THE CONCERNS OF GEOENGINEERING ET AL:

YOU THIEVING B****RDS....YOU HAVE STOLEN WATER FROM THE STATE OF MICHIGAN FOR A FEE OF A MEASLY $200.00 WITH THE PERMISSION FROM THE CORRUPT STATE OF MICHIGAN CORPORATION POSING AS OUR TRUE DEJURE GOVERNMENT. THIS PERMIT ALLOWS YOU TO SUCK OVER ONE MILLION GALLONS OF WATER A DAY FROM NOT JUST ONE WELL, BUT SEVERAL WELLS A DAY AND YOU ARE ALLOWED TO POLICE YOURSELVES...HUH! THERE ARE OTHER COMPANIES DOING THE SAME BUT YOU ARE ON THE TOP OF THE LIST. YOU ARE FOREIGN, AND YOU ARE CORRUPT!!!! THERE WERE LADIES IN THE AREA WHERE NESTLES IS STEALING AND THEY WERE TRYING TO BRING THIS TO THE ATTENTION OF THE PEOPLE OF MICHIGAN AND YOU VIA A DARK FACTION OF THE FBI HAVE TERRORIZED THEM FOR EXPOSING YOU. WE HAVE HAD IT!! WE, THE PEOPLE OF MICHIGAN AND THE REST OF AMERICA HAVE TO PAY FOR WATER THAT CAME FROM GOD, WHICH SHOULD BE FREE, (FYI) EXCEPT FOR A FIXED FEE TO MAINTAIN THE WATER SYSTEM. WE, THE PEOPLE OF MICHIGAN DID NOT GIVE YOU PERMISSION TO STEAL OUR PRECIOUS WATER OUT OF OUR BEAUTIFUL LAKES. WE HAVE CORRUPT LEGISLATORS ALLOWING THIS AND ONLY ONE LEGISLATOR OUT MANY WHO IS PROPOSING THAT YOU PAY FOR THE WATER WITH A MEASLY FIVE CENTS PER GALLON. OUR YOU KIDDING ME????

TO OUR LEGISLATORS, NESTLES, AND ALL OF THE CORRUPT GOVERNMENT USURPERS AND POSERS YOU WILL BE HELD ACCOUNTABLE FOR EVERYTHING THAT YOU HAVE ALLOWED AND PROFITED FROM FROM THE THEFT OF WATER IN MICHIGAN; TO THE POISONING OF THE PEOPLE OF THE CITY OF FLINT! WE KNOW THAT YOU ALL ARE COMPLICIT FROM THE GOVERNOR ON DOWN. IT IS TIME FOR CITIZENS ARRESTS AND GRAND JURIES. WHERE ARE OUR MILITIAS???