Two HSBC foreign exchange traders have been charged with fraud after making $8m (£6m) in profits and fees by “front running” a $3.5bn foreign exchange trade for a UK listed oil and gas company.
A statement from the US Department for Justice says UK citizens Mark Johnson, HSBC global head of forex cash trading, and Stuart Scott, who was head of forex cash trading for Europe, the Middle East and Africa until leaving HSBC in 2014, were both charged.
Johnson was arrested on 19 July at John F Kennedy Airport in New York while a warrant has been issued for Scott’s arrest. The FT reports Johnson was later released.
The Department of Justice alleges the two traders deliberately bought sterling ahead of an unnamed client’s – understood to be Cairn Energy – $3.5bn purchase of the currency before reselling it back to them at a higher price.
According to the FT, US authorities allege the traders used a technique called “ramping” which causes the price of a currency to spike and ultimately benefits the bank’s books.
The Department of Justice alleges the traders made $3m in profits in their own trading book and that HSBC received $5m in improper fees.
The FCA is understood to be waiting for any criminal action against Scott and Johnson to conclude before taking any regulatory action.