Former Head of HSBCs Global Foreign Exchange Cash Trading Sentenced for Front-Running Scheme
https://www.justice.gov/usao-edny/pr/former-head-hsbc-s-global-foreign-exchange-cash-trading-sentenced-24-months
Department of Justice
U.S. Attorneys Office
Eastern District of New York
FOR IMMEDIATE RELEASE
Thursday, April 26, 2018
Former Head of HSBCs Global Foreign Exchange Cash Trading Sentenced to 24 Months Imprisonment for Front-Running Scheme
Mark Johnson Defrauded Client Out of Millions of Dollars by Misusing Confidential Information
Earlier today, in federal court in Brooklyn, Mark Johnson, the former head of global foreign exchange cash trading at HSBC Bank plc, a subsidiary of HSBC Holdings plc (collectively HSBC), was sentenced by United States District Judge Nicholas G. Garaufis to 24 months imprisonment for committing wire fraud and wire fraud conspiracy, to be followed by five years supervised release. The Court also ordered Johnson to pay a $300,000 fine. Johnson was convicted by a federal jury in October 2017, following a four-week trial, of one count of wire fraud conspiracy and eight counts of wire fraud. The Court remanded Johnson to the custody of the Bureau of Prisons.
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As established at trial, HSBC was selected in 2011 to execute a foreign exchange transaction on behalf of a client, which would require converting approximately $3.5 billion into British Pounds Sterling. HSBCs agreement with the client required the bank to keep the details of the planned transaction confidential. Instead, Johnson misused that confidential information, defrauding the client.
Shortly before the transaction, which occurred in December 2011, Johnson and other traders acting under his direction purchased Pounds Sterling for HSBCs benefit in their HSBC proprietary accounts. Johnson then caused the $3.5 billion foreign exchange transaction to be executed in a manner designed to ramp, or drive up, the price of the Pounds 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 profits for HSBC of roughly $7.3 million from the execution of the transaction.
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