HSBC in US$100 million forex fraud settlement

NEW YORK: British financial giant HSBC has agreed to pay more than US$100 million to US authorities after admitting to defrauding clients during multi-billion-dollar foreign exchange transactions, the Justice Department announced.

The settlement follows an indictment handed down Wednesday against a former Barclays trader similarly accused of defrauding the former California computing giant Hewlett-Packard by manipulating foreign exchange markets.

Under the terms of the agreement, which is under review by a federal judge in Brooklyn, HSBC will pay a US$63.1 million fine and an additional US$38.4 million in restitution and disgorgement – or the return of ill-gotten gains, the Justice Department 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,” John Cronan, the acting head of the department’s criminal division, said in a statement.

“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.”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.

US officials only identified one of the two clients: the British oil and gas explorer Cairn Energy.

HSBC has agreed to continue cooperating with investigators and foreign authorities in any related investigations, including cases brought against individuals and to enhance its internal safeguards against misconduct. — AFP