HSBC Holdings Plc Enters Into Deferred Prosecution Agreement To Resolve Fraud Charges

Gladys Abbott
January 20, 2018

Banking giant HSBC will pay $101.5m to U.S. authorities to settle a criminal investigation into currency rigging.

The settlement included $38.4m (£27.5) in restitution and a $63.1m (£45.2) fine, reflecting a 15 per cent reduction in recognition of the bank's cooperation during the investigation and its "extensive remediation", HSBC said in a statement today (19 January).

The move comes after HSBC reached settlements over its forex trading business with the Financial Conduct Authority and US Commodity Futures Trading Commission in November 2014.

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The investigation centred on HSBC's foreign exchange (FX) traders who misused confidential client information in 2010 and 2011 during multibillion-dollar FX transactions.

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HSBC Holdings has agreed to pay $101.5 million to resolve federal fraud charges stemming from the bank's misuse of confidential client information for its own profit, a practice commonly known as front-running.

"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", Cronan said.

The fine already has been provided for in HSBC's accounts, it said. In total, HSBC admitted to making profits of approximately USD38.4 million on the first transaction in March 2010, and approximately USD8 million on the Cairn Energy transaction in December 2011. The bank added that it is committed to guarantee fair outcomes for its customers along with securing the orderly and translucent operation of the markets.

It said it has agreed with USA prosecutors to take further steps to beef up its compliance program and internal controls. HSBC traders then caused the large transactions to be executed in a manner created to drive the price of the pound in a direction that benefited HSBC and harmed their clients. The company has also agreed to continue cooperating with the department and foreign authorities in any ongoing investigations and prosecutions.

Last October, a former HSBC employee, Mark Johnson, was convicted of fraud in connection with the case.

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