A top trader at banking giant HSBC has been released on bail after he was arrested by FBI agents and charged with fraudulently rigging a $3.5bn currency exchange deal.
Mark Johnson, the bank’s head of global foreign exchange cash trading, was arrested by federal agents at New York’s JFK International Airport on Tuesday evening as the US Department of Justice continues its long-running probe into foreign exchange trading.
Mr Johnson, 50, who is a UK citizen but lives in America, was released on a $1m bail after appearing on Wednesday at a Brooklyn federal court charged with allegedly conspiring to defraud an HSBC client through a “front running” scheme.
Stuart Scott, 43, HSBC’s former head of foreign exchange cash trading for Europe, the Middle East and Africa, who lives in the UK, has also been charged. A warrant has been issued for Mr Scott’s arrest.
The two men are accused of conspiring to commit wire fraud between November and December 2011 after “misusing information” from a client that hired HSBC to carry out a foreign exchange transaction linked to the sale of a foreign subsidiary.
It is alleged the two men “caused the $3.5bn foreign exchange transaction to be executed in a manner that was designed to spike the price of the pound sterling, to the benefit of HSBC and at the expense of their client”.
Mr Johnson reportedly said on a telephone call to Mr Scott “Ohhhh f**king Christmas” when the full order for the amount was authorised.
The “front running” enabled them to generate $8m, some of it illegally, to the benefit of HSBC and at the expense of their client, it is alleged.
Robert Capers, US attorney for the Eastern District of New York, said: “As alleged, 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.”
Defence lawyer Frank Wohl declined to comment after Mr Johnson was released on bail following an initial court appearance before a magistrate in Brooklyn.
Assistant attorney general Leslie Caldwell said: “The defendants allegedly betrayed their client’s confidence, and corruptly manipulated the foreign exchange market to benefit themselves and their bank.”
She added: “This case demonstrates the criminal division’s commitment to hold corporate executives, including at the world’s largest and most sophisticated institutions, responsible for their crimes.”
In August last year, nine banks including Britain’s Barclays, HSBC and Royal Bank of Scotland agreed a settlement of more than $2bn with US investors over foreign exchange rate rigging claims.
Mr Johnson’s arrest is the latest scandal to impact HSBC which came under fire from US senators in 2012 after drug cartels laundered money through the bank’s Mexican operation.
HSBC is not accused of any wrongdoing and declined to comment.