HSBC Execs Charged |in U.S. Currency Case

     (CN) — The head of HSBC bank’s foreign exchange desk was arrested Wednesday for orchestrating an $8-million dollar front-running scheme with British pounds, authorities announced.
     Charges also were unsealed today against the former head of operations for Europe, the Middle East and Africa on similar charges.
     The two men are said to be the first HSBC bankers to be charged in the sprawling U.S. currency case that continues to wreak havoc on the troubled bank in its continued legal troubles.
     Mark Johnson, 50, and Stuart Scott, 43, both Brits living in the United States, are now officially accused of conspiracy to commit wire fraud.
     Johnson was arrested last night on his way out of the city at John F. Kennedy International Airport and was set to be arraigned today before U.S. Magistrate Judge Lois Bloom in Brooklyn Federal Court.
     According to the federal government’s complaint, in November and December of 2011, the men “misused information” given to them by a client that had hired HSBC to put together a foreign exchange transaction for the sale of foreign subsidiaries.
     The plan was to convert $3.5 billion in sales proceeds into British pounds.
     The two men then used the information from the client to cause that exchange to spike the price of the British pound sterling for the bank and to line their own pockets.
     Their alleged scam pulled down about $8 million, feds say.
     “The defendants allegedly betrayed their client’s confidence, and corruptly manipulated the foreign exchange market to benefit themselves and their bank,” U.S. Assistant Attorney General Leslie Caldwell said in a statement.
     The men “placed personal and company profits ahead of their duties and trust and confidentiality owed to their client, and in doing so, defrauded their client of millions of dollars,” added U.S. Attorney Robert Capers.
     The men tried to backtrack and weave a “web of lies” when questioned, Capers added.
     Officials weren’t done dinging the men, adding in a news release that they are accused of “defrauding clients by misusing confidential information to manipulate currency prices for the benefit of the bank and themselves,” said the FBI’s Assistant Director in Charge Paul Abbate in Washington, D.C.
     The current legal woes are seemingly unrelated to recent wranglings that saw the bank being hauled before a congressional subcommittee earlier this month. After a grilling, the Committee on Financial Services for the House then issued its long-winded report titled, “Too big to jail” and decided to drop it after the investigation amid allegations that the bank gave $900 million to drug traffickers and terrorists in 2012.
     The report was written by that committee’s chairman, Jeb Hensarling, representing Texas.
     It’s the latest in a line of legal issues for the bank.
     The bank was sued in Manhattan Federal Court in February with accusations that they funded the Mexican drug cartel.
     President Barack Obama and his then-Attorney General Eric Holder, himself a former Wall Street lawyer, decided to back off the bank when legal troubles first sprung up and questions of impropriety first arose. A deal was swung, and the banking fat cats went untouched.
     Senior officials with the Department of Justice at the time justified the decision, thinking that a prosecution against the bank “could result in a global financial disaster.”
     “While the FSA folks did not argue specifically against a prosecution, it was clear they were very concerned about the reverberations such an action could have within the financial system, and they asked for urgent high level discussions” with the DOJ, according to the report.A phone call and an emailed request for comment to the bank were not returned Wednesday afternoon.

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