HSBC Banker Convicted of Wire Fraud, Looking at 20 Years

BROOKLYN (CN) — The former head of HSBC Bank’s foreign exchange cash trading faces up to 20 years in prison after a federal jury convicted him Monday of defrauding an HSBC client through a multimillion-dollar “front running” scheme.

Mark Johnson, 51, of Great Britain, was convicted of conspiracy to commit wire fraud and eight counts of wire fraud.

Front running involves market makers dealing on advance information before delivering the information to the client. Prosecutors said Johnson and other traders case manipulated foreign exchange rates in a deal involving Cairn Energy, an HSBC client, to gain an extra $7.5 million for HSBC and their own proprietary accounts.

Cairn Energy’s foreign exchange transaction with HSBC required converting 2.25 billion pounds in sales proceeds, approximately $3.5 billion, into British Pound Sterling.

The conspirators were accused of buying Pounds Sterling for their own accounts ahead of the $3.5 billion foreign exchange transaction to drive up the price of the Pound Sterling, benefiting their proprietary positions and HSBC at the expense of Cairn Energy.

Johnson also was accused of making misrepresentations to the client that concealed the self-serving nature of his actions.

An eight-man, four-woman jury convicted him after a four-week trial in U.S. District Judge Nicholas G. Garaufis’ courtroom in the Eastern District of New York.

Johnson was arrested at JFK airport in July 2016 and indicted in August that year.

Johnson was the first banker to be tried in a U.S. court as a result of international investigations into the $5.3 trillion per day foreign-exchange currency market.

His sentencing date has not been set.

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