U.S. authorities have charged two HSBC executives in connection with a scheme to defraud clients in a multi-billion-dollar currency transaction.
Mark Johnson, the head of global foreign exchange cash trading at HSBC Bank, and Stuart Scott, the bank's former head of cash trading in Europe, were charged with conspiracy to commit wire fraud, according to a Justice Department release.
Johnson, a British citizen and U.S. resident, was arrested Tuesday night at New York's John F. Kennedy International Airport. He was expected to be arraigned Wednesday. Scott, who is also British, has not been arrested.
"These individuals are accused of defrauding clients by misusing confidential information to manipulate currency prices for the benefit of the bank and themselves," said Paul Abbate, from the Federal Bureau of Investigation, which partnered with the Federal Deposit Insurance Corporation (FDIC) in investigating the case.
Authorities allege that in 2011, Johnson and Scott misused information provided by a client about a future currency transaction, and made earlier trades that caused the client's "$3.5 billion foreign exchange transaction to be executed in a manner that was designed to increase the price of the pound sterling, to the benefit of HSBC and at the client's expense.”
According to the Justice Department complaint, HSBC netted $8 million in fees and profits from the transaction.
