Bank to Pay over $100 Million to Resolve FX Price-Fixing Fraud Charges

HSBC Holdings plc ("HSBC") entered into a deferred prosecution agreement ("DPA") with the Department of Justice (the "Department") and agreed to pay over $100 million, including a $63.1 million criminal penalty and $38.4 million in disgorgement and restitution, to resolve charges that it defrauded two bank clients through a "front-running" scheme by its foreign exchange ("FX") traders.

According to the DPA, on two separate occasions, traders on HSBC's foreign exchange desk misused confidential information to transact multi-billion dollar foreign exchange deals in British Pound Sterling ("GBP") to the detriment of their client. In total, the traders were able to generate over $46 million from two transactions. HSBC traders also were found to have made various misleading representations to clients regarding the changes in the price of the GBP in order to conceal the traders' improper trading activity.

According to the Department, the resolution took into account several factors: (i) HSBC's remedial measures, including dedicating significant resources to improving its systems and controls and a commitment to enhance HSBC's compliance program and internal controls, (ii) terminating the employment of employees involved in wrongdoing, and (iii) continuing cooperation with the Department's investigation. The Department also took into account HSBC's previous settlement with the client for approximately $8 million, which the Department credited as full restitution.

Former HSBC head of FX trading Mark Johnson was previously found guilty of various charges for his role in the front-running scheme.