- The Washington Times - Thursday, January 18, 2018

HSBC Holdings has agreed to pay $101.5 million to settle claims it defrauded two of its clients.

The payment includes a $63.1 million fine and $38.4 million in restitution to a corporate client, according to announcement from the U.S. Department of Justice.

In addition, HSBC, a British bank, agreed to bolster its internal controls and admitted and accepted responsibility for wrongdoing as a part of a deferred prosecution agreement. That means HSBC can avoid criminal charges as long as they comply with the deal’s terms.

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The Justice Department said it based the agreement on a number of factors, including the $46.4 million that HSBC gained from the scheme, its remedial measures to date, terminating employees involved in the wrongdoing and enhancing its internal controls. It also received substantial cooperation credit.

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,” said acting Assistant Attorney General John P. Cronan. “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.”

On two separate occasions in 2010 and 2011, HSBC’s foreign exchange traders misused confidential information provided to them by the bank’s clients. Although confidentiality agreements required the bank keep the transactions’ details provide, the traders conducted large transactions to be executed to drive the price of the British pound in a direction that benefited the bank and harmed clients, the Justice Department said. HSBC also made misrepresentations to one of its clients, Carin Energy, to cancel the nature of the transactions.

In October, a federal jury in Brooklyn convicted Mark Johnson, the former head of HSBC’s global foreign exchange cash-trading desk of one count of conspiracy and eight counts of wire fraud. He his scheduled to be sentenced on Feb. 15.

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