Log in or Register for enhanced features | Forgotten Password?
White Papers | Suppliers | Events | Report Store | Companies | Dining Club | Videos
Banking Services
Return to: BBR Home | Banking Services | Payments

HSBC to pay over $100m to settle financial fraud charges in US

BBR Staff Writer Published 22 January 2018

HSBC has agreed to pay over $100m to settle financial crime charges in the US.

Under the deferred prosecution agreement (DPA) with the US Department of Justice, the company will pay $63.1m criminal penalty and $38.4m in disgorgement and restitution to settle charges for involving in a front-running scheme to defraud two bank clients.

As per HSBC’s admissions, traders on its foreign exchange desk misused confidential information offered to them by clients that appointed HSBC to perform multi-billion dollar foreign exchange transactions involving the British Pound Sterling. 

HSBC admitted that it had earned profits of around $38.4m on the first transaction in March 2010 and around $8m on the Cairn Energy transaction in December 2011.     

The financial services firm has also agreed to provide its cooperation for the department and foreign authorities in any ongoing investigations and prosecutions linked to the conduct.

HSBC noted that the payment is a 15% reduction in the fine amount in credit of its cooperation during the investigation and extensive remediation.

In addition, the firm said that it is mplementing algorithmic trading to manage risk around benchmark orders and involving outside firms to audit its internal controls.

The US Department of Justice’s criminal division acting assistant attorney general John Cronan said: “HSBC’s admissions in connection with this resolution confirm that the company misused confidential client information for its own profit on more than one occasion.

“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.”

Image: The world headquarters of HSBC in Canary Wharf, London. Photo: courtesy of Michael Pead.