HSBC Is Slapped With Big Fine by Fed -- WSJ
30 September 2017 - 5:02PM
Dow Jones News
By Margot Patrick and Ryan Tracy
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 30, 2017).
The Federal Reserve fined HSBC Holdings PLC $175 million for
failing to adequately supervise its foreign-exchange trading
business and said activities by two senior traders now being
prosecuted are examples of the lack of oversight.
Mark Johnson, HSBC's former global head of foreign-exchange cash
trading, is on trial in New York for allegedly trading ahead of a
$3.5 billion currency transaction for a client. Mr. Johnson denies
the charges. His lawyer didn't immediately return a call.
The Fed said the bank's deficient policies and procedures
allowed Mr. Johnson and another senior trader, Stuart Scott, to
misuse information "in a manner that benefited them and their
trading desk" to the detriment of the client. Mr. Scott has also
been charged and is contesting extradition from the U.K. to stand
trial. He denies the charges.
In 2011, HSBC client Cairn Energy PLC hired the bank to convert
proceeds from the sale of an Indian subsidiary into sterling.
Prosecutors allege Messrs. Johnson and Scott bought pounds first
for HSBC's own accounts, driving up the price. The bank made about
$8 million from the trades, prosecutors say.
The Fed said the British bank "failed to detect and address its
traders misusing confidential customer information, as well as
using electronic chat rooms to communicate with competitors about
their trading positions."
An HSBC spokesman said the bank was pleased to have resolved the
matter with the Fed and declined to comment on Mr. Johnson's trial.
The bank isn't named as a party in the action against Messrs.
Johnson and Scott in New York.
The fine comes after other regulators also levied penalties and
ordered remedial action at HSBC over activities in the same period
between 2008 and 2013 that the Fed studied. But none had explicitly
singled out the behavior of Messrs. Johnson and Scott.
Banks collectively have paid billions of dollars in penalties
since a global regulatory probe into foreign-exchange market
activities started in 2013.
The Fed on Friday ordered HSBC to improve risk management in its
foreign-exchange business.
Write to Margot Patrick at margot.patrick@wsj.com and Ryan Tracy
at ryan.tracy@wsj.com
(END) Dow Jones Newswires
September 30, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Capricorn Energy (LSE:CNE)
Historical Stock Chart
From Apr 2024 to May 2024
Capricorn Energy (LSE:CNE)
Historical Stock Chart
From May 2023 to May 2024