Ex-HSBC Trader Involved In Front-Running Scandal To Be Extradited To U.S.

It's not shaping up to be a great week for a group of former HSBC FX traders who decided to front-run a massive $3.5 billion currency trade placed by one of their clients and net their bank some $8 million in illicit profits in the process.  Earlier this week, Ex-HSBC currency trader Mark Johnson, who was unwittingly captured on an audio recording saying "I think we got away with it," was convicted by a jury in New York of fraud. 

Now we learn that Johnson's partner in crime (allegedly, of course), Stuart Scott, has lost his court battle in the U.K. and will be extradited to the U.S. to face charges.

Not surprisingly, Scott expressed some "disappointment" with the ruling shortly after being dismissed from court.

*SCOTT SAYS HE IS DISAPPOINTED BY EXTRADITION RULING

*SCOTT SAYS U.S. CASE IS FLAWED, INACCURATE

Scott

As we've noted previously, Mark Johnson was arrested at New York’s Kennedy Airport in 2016 before he could return to the U.K. but Stuart Scott has remained free at his home in the London suburbs...until now.  Per Bloomberg:

Mark Johnson, HSBC’s global head of foreign exchange cash trading in London, was taken into custody at John F. Kennedy International Airport Tuesday and is scheduled to appear before a judge in federal court in Brooklyn Wednesday morning, said the people, who asked not to be named because the case hasn’t been made public. He’s charged with conspiracy to commit wire fraud, the people said.

 

According to Bloomberg, Johnson’s arrest comes more than a year after five global banks pleaded guilty to charges related to the rigging of currency benchmarks. HSBC, which wasn’t part of those criminal cases, in November 2014 agreed to pay $618 million in penalties to U.S. and British regulators to resolve currency manipulation allegations. HSBC, which still faces investigations by the Justice Department and other authorities for the conduct, has set aside $1.3 billion for possible settlements, according to an August filing.

 

Rob Sherman, an HSBC spokesman, and Peter Carr, a Justice Department spokesman, declined to comment.

A few weeks ago, details of court filings began to leak from Scott's British extradition case which allowed us to learn exactly how much each HSBC trader made for his trading book in the illicit scheme that netted a total of $8 million in profits...Scott took second place with a total profit of $585,105.  Per Bloomberg:

"The defendant personally obtained over $500,000 profit," the U.S. Justice Department, represented by British lawyer Mark Summers, said in written arguments prepared for the hearing. "The offenses of which he is accused are highly serious. They involve a systematic and organized conspiracy to defraud, committed in breach of trust."

 

Scott was charged, along with his ex-boss Mark Johnson, by the Justice Department in July 2016 with using insider knowledge to front-run a $3.5 billion currency deal by Cairn Energy Plc that made the bank $8 million. Johnson is on trial in New York and a jury there could begin deliberations this week.

Here's how everyone else made out per the DOJ:

Trading Gains

For those who haven't followed the story closely, according to the original DOJ complaint, HSBC was selected by Cairn Energy Plc to execute a foreign exchange transaction – which was going to require converting approximately $3.5 billion in sales proceeds into British Pound Sterling – in October 2011.  But, before executing that trade, he tipped off a bunch of HSBC traders who loaded up their proprietary accounts with Pounds just before the massive trade sent the currency higher.

“As alleged, the defendants placed personal and company profits ahead of their duties of trust and confidentiality owed to their client, and in doing so, defrauded their client of millions of dollars,” stated United States Attorney Capers.  “When questioned by their client about the higher price paid for their significant transaction, the defendants wove a web of lies designed to conceal the truth and divert attention away from their fraudulent trades.  The charges and arrest announced today reflect our steadfast commitment to hold accountable corporate executives and licensed professionals who use their positions to fraudulently enrich themselves.”

 

“The defendants allegedly betrayed their client’s confidence, and corruptly manipulated the foreign exchange market to benefit themselves and their bank,” said Assistant Attorney General Caldwell.  “This case demonstrates the Criminal Division’s commitment to hold corporate executives, including at the world’s largest and most sophisticated institutions, responsible for their crimes.”

Of course, we're sure this is all just an effort to "criminalize behavior that is normal"...at least on Wall Street. 

Comments

Yog Soggoth JoseyWalesTheOutlaw Thu, 10/26/2017 - 18:26 Permalink

That is where the bank should get fined, and a separate settlement for anyone who did trading on any of the days during tenure of said accomplices, along with every single person that had either of the two currencies in the entire world, with all loss of money considered. By that I mean how much money could be made with the looted money, court costs, accountants, lunches, tips, missed time, broken deals pertaining to timeframe, costs of divorce from trophy wife, plus future alimony up to 130 years from birth, and inflation to the minute of whole transaction. Basically, a huge staff of people to drain the heck out of the bank for everyone who is a victim. That would curb that scam, because they would be broke in a day. We just need to get organized.

In reply to by JoseyWalesTheOutlaw

Yog Soggoth HRClinton Thu, 10/26/2017 - 18:45 Permalink

All currencies are convertable in some way to another. By manipulating the system (stealng) these scum  are not just ripping off the usd/euro, they are debasing all currencies. If you doubt my claim, then I will gladly take any supposedly nonconvertable currencies off your hand, including Confederate dollars and Rai/Yap stones. Heinous indeed.

In reply to by HRClinton

HominyTwin Thu, 10/26/2017 - 11:49 Permalink

You see what is happening here? If these traders were making profits for their banks, they would not be targeted. Since they were front running for their own accounts, they are being prosecuted. Front running is ok as long as the banks profit.

venturen Thu, 10/26/2017 - 12:07 Permalink

yep...no top executive knew anything...even though EVERY TRADE and WORD WAS RECORDED and BONUSES HANDOUT!Time to break up the crooked mega banks

buzzsaw99 Thu, 10/26/2017 - 12:11 Permalink

...reflect our steadfast commitment to hold accountable corporate executives and licensed professionals who use...how exactly does prosecuting those two piker bozos hold executives accountable?  free cohen, paulsonX2, corzine, blankfein, dimon, et al.

To Hell In A H… Thu, 10/26/2017 - 12:12 Permalink

Only GOYS get extradited. Jews circumvent the legal system by owning the politicians, or using their network of gentile judges, lawyers and prosecuters to prearange avoiding justice. Until GOYS wise up nothing will change.

Anteater To Hell In A H… Thu, 10/26/2017 - 12:56 Permalink

Jared was 'never in the room' when Don Jr committed treason,and Jared immediately bugged out to Tel Aviv when news broke,because unlike Don Jr, he didn't feel he could get the Congressto meet in SECRET HEARING, then declare Don Jr 'exculpated'.Anyway, water over the dam after the Mandalay Bay reminderwe must never speak of The Chosen and Orange Diaper Head.HSBC was as crooked as a Susan B Anthony bitcoin, yet hereyears later, they indict two minor goys who plead nolo, thenHSBC pays a fine, they get time off for pleading nolo, and it'swater over the dam, ahead of massive 401k tapering losses.

In reply to by To Hell In A H…

oncemore Thu, 10/26/2017 - 13:14 Permalink

If US authorities want to get hopp a banker, then they must not go so far, as to UK.They have to start infront of their door. Next corner, down the street left and right. They should begin with Greenspan, Ben Shalom Bernanke and Jeanet Deer, oh Jelen.

JailBanksters Thu, 10/26/2017 - 19:06 Permalink

It's easier to extradite somebody from another country to charge them with Fraud,than it is to charge somebody on Wall St with Fraud.That's American JustUS in action.