Former head of HSBC’s global forex cash sentenced to prison
Staff Writer |
The former head of global foreign exchange cash trading at HSBC Bank, a subsidiary of HSBC Holdings, was sentenced to prison today for his role defrauding an HSBC client through a scheme commonly referred to as “front running.â€
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The Court remanded Johnson to the custody of the Bureau of Prisons.
Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Richard P. Donoghue of the Eastern District of New York, Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation (FDIC) and Assistant Director in Charge Nancy McNamara of the FBI’s Washington Field Office made the announcement.
Mark Johnson, 51, a United Kingdom citizen, was sentenced to serve 24 months in prison by U.S. Distict Judge Nicholas Garaufis of the Eastern District of New York. In addition, Judge Garaufis ordered that the defendant pay a fine of $300,000.
A federal jury convicted the defendant on Oct. 23, 2017, following a four-week trial, of one count of wire fraud conspiracy and eight counts of wire fraud.
According to the evidence presented at trial, in November and December 2011, Johnson cheated an HSBC client out of millions of dollars by misusing information provided to him by that client, which had hired HSBC to execute a foreign exchange transaction related to a planned sale of one of the client’s foreign subsidiaries.
HSBC was selected to execute the foreign exchange transaction – which was going to require converting approximately $3.5 billion in sales proceeds into British Pound Sterling – in October 2011.
HSBC’s agreement with the client required the bank to keep the details of the client’s planned transaction confidential.
Instead, Johnson misused confidential information he received about the client’s transaction to cheat the client out of millions of dollars, the evidence showed.
Shortly before the transaction, Johnson and other traders acting under his direction purchased Pounds Sterling for their own benefit in their HSBC “proprietary†accounts.
Johnson then caused the $3.5 billion foreign exchange transaction to be executed in a manner that was designed to “ramp,†or drive up, the price of the Pound Sterling, benefiting their proprietary positions and HSBC at the expense of their client.
As part of the scheme, Johnson and his co-conspirators also made misrepresentations to the client about the transaction that concealed the self-serving nature of their actions.
The evidence showed that in total, Johnson and the traders he supervised generated HSBC profits of roughly $7.3 million from the execution of the transaction, including profits generated from the front-running conduct. ■