In the US, HSBC Holdings Plc. will pay approximately $100M in penalties to settle a Department of Justice’s criminal probe into currency rate rigging—that’s a $63.1M fine and $38.4M in restitution. The bank’s deal is a three-year deferred prosecution agreement, which means that no criminal charges will be brought as long as HSBC fulfills the terms. As part of the settlement, HSBC will help the government with its criminal probe of individuals who may have played a part in the rate manipulation and enhance its internal controls.
The currency rate rigging allegations involved at least two ex-HBSC employees, including Mark Johnson, the ex-worldwide head of its foreign exchange trading and Stuart Scott, the ex-head of its European currency trading. Johnson has already been convicted in the front-running case involving a $3.5B trade by client Cairn Energy Plc. He is scheduled for sentencing next month. Scott is currently fighting a court order in the UK so as to avoid extradition back to the US to face the criminal charges against him.
Both men are accused of buying British pounds leading up to the Cairn Energy trade, with the expectation that their purchases, and the one by Cairn Energy, would cause the pound’s price to go up. After the Cairn Energy order went through and the value of their pounds rose, the two men sold their currency at a profit.