HSBC in $100 million forex fraud settlement

January 19, 2018
HSBC was one of six major US and European banks that were fined a total $4.2 billion by global regulators in a November 2014 crackdown for attempted manipulation of the foreign exchange market

British financial giant HSBC has agreed to pay more than $100 million to US authorities after admitting to defrauding clients during multi-billion-dollar foreign exchange transactions, the Justice Department announced Thursday.

The settlement follows an indictment handed down Wednesday against a former Barclays trader similarly accused of defrauding the former California computing giant Hewlett-Packard by manipulating foreign exchange markets.

Under the terms of the agreement, which is under review by a federal judge in Brooklyn, HSBC will pay a $63.1 million fine and an additional $38.4 million in restitution and disgorgement—or the return of ill-gotten gains, the Justice Department said.

"HSBC's admissions in connection with this resolution confirm that the company misused confidential client information for its own profit on more than one occasion," John Cronan, the acting head of the department's criminal division, said in a statement.

"This sort of misconduct not only harmed their clients, costing the victims money, but it also ran a serious risk of undermining the public's confidence in our financial markets."

Prosecutors say that in 2010 and 2011, traders on HSBC's foreign exchange desk used confidential client information to conduct trades in British currency that deliberately drove the price of sterling in a direction benefitting the bank and harming the clients.

US officials only identified one of the two clients: the British oil and gas explorer Cairn Energy.

HSBC has agreed to continue cooperating with investigators and foreign authorities in any related investigations, including cases brought against individuals and to enhance its internal safeguards against misconduct.

The Justice Department said HSBC received no leniency for voluntarily disclosing the matter, adding that initially the bank's cooperation with investigators was also "deficient in certain respects."

But that HSBC soon "changed course" after prodding from the government, earning "substantial cooperation credit."

The bank faces charges of wire fraud but these are likely to be dropped once HSBC fulfills its obligations under the settlement.

Thursday's settlement comes barely a month after the lapse of a landmark five-year, $1.9-billion deal between US authorities and HSBC in which the British lender avoided prosecution after admitting in 2012 to widespread money-laundering and sanctions violations.

In October, HSBC's former head of foreign exchange cash trading, Mark Johnson, was convicted of eight counts of conspiracy and one count of wire fraud after a four-week trial. He is due to be sentenced next month.

HSBC was one of six major US and European banks that were fined a total $4.2 billion by global regulators in a November 2014 crackdown for attempted manipulation of the foreign exchange market.

Explore further: HSBC websites hit by cyber attack

Related Stories

HSBC websites hit by cyber attack

October 19, 2012

Banking giant HSBC said Friday some of its websites had been hit by a "large scale" cyber attack that disrupted online services, but it assured customers that their data were not compromised.

HSBC to pay $1.9B to settle money-laundering case

December 11, 2012

(AP)—HSBC avoided a legal battle that could further savage its reputation and undermine confidence in the global banking system by agreeing Tuesday to pay $1.9 billion to settle a U.S. money-laundering probe.

HSBC funding Indonesian forest destruction: Greenpeace

January 17, 2017

Greenpeace on Tuesday accused banking giant HSBC of helping to arrange billions of dollars in financing for companies whose palm oil operations have been blamed for destroying vast swathes of Indonesian rainforest.

Hong Kong bourse hit by 'malicious hacking'

August 10, 2011

The Hong Kong stock exchange said Wednesday its website had been hit by "malicious hacking", forcing trading in at least seven companies that issued price-sensitive information to be suspended.

Recommended for you

Researchers engineer a tougher fiber

February 22, 2019

North Carolina State University researchers have developed a fiber that combines the elasticity of rubber with the strength of a metal, resulting in a tougher material that could be incorporated into soft robotics, packaging ...

A quantum magnet with a topological twist

February 22, 2019

Taking their name from an intricate Japanese basket pattern, kagome magnets are thought to have electronic properties that could be valuable for future quantum devices and applications. Theories predict that some electrons ...

1 comment

Adjust slider to filter visible comments by rank

Display comments: newest first

unrealone1
not rated yet Jan 19, 2018
Love bitcoin, with bitcoin this could not happen.

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.