HSBC to pay $100m in currency rigging settlement

The bank has got agreed to pay nearly $100 million in penalties to settle down a U.S. Justice Department investigation into the wrong manipulation of currency rates.

HSBC added the DoJ had agreed to reduce the fine by 15% after taking into account the bank's cooperation and "extensive remediation" efforts.

In one March 2010 transaction, it converted approximately GBP5.3 billion ($7.4 billion) to US dollars for a client - identified in court documents only as a financial-services company - that resulted in a $38.4 million profit for HSBC.

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Prosecutors say that in 2010 and 2011, traders on HSBC's foreign exchange desk used confidential client information to conduct trades in British currency that deliberately drove the price of sterling in a direction benefitting the bank and harming the clients. The deal has to be ratified by a United States court but if approved would allow Europe's biggest lender to avoid criminal charges.

HSBC, which is Europe's biggest bank, has admitted its traders twice misused confidential information provided to them by clients for its own profit.

That company was not identified by the DoJ.

British citizen who at the time of his arrest was HSBC's global head of foreign exchange cash trading exits following a hearing at the U.S. Federal Court in Brooklyn New York
Image Mark Johnson has protested his innocence

The bank previously paid $8 million to settle with the other client, Cairn Energy. The former head of foreign exchange cash trading at HSBC faces up to 20 years in federal prison.

"Today's agreement represents that the financial services company, HSBC Holdings, is responsible for the conduct of its employees, and that it must not be permitted to benefit from the fraud committed by bank personnel", said Inspector General Lerner.

The London-listed bank said it would also take "additional steps" to bolster its compliance programme and internal controls.

One of the ex-bankers involved, Mark Johnson, has already been found guilty of conspiracy and wire fraud.

Measures taken by HSBC to improve the control environment in its Global Markets division includes the implementation algorithmic trading to manage risk around benchmark orders, updating the policies for sales, pricing and order handling, and engaging with outside firms to audit its internal controls.

It had to pay nearly $2bn in that case.

  • Eleanor Harrison