Mark Johnson, the former head of HSBC’s global foreign exchange cash trading, was convicted yesterday on one count of conspiracy to commit wire fraud and eight counts of wire fraud after a four-week trial in the U.S. District Court for the Eastern District of New York, the New York Law Journal reported today. Johnson and a co-defendant were charged in July 2016 of defrauding an HSBC client through a multimillion-dollar “front running” scheme, where a party uses confidential information to stake out a position on a security that will allow that person to capitalize on the increased value of that security. The federal government alleged Johnson used his position at HSBC to do just that. The British bank was selected to execute a confidential FX transaction for one of its client’s subsidiary. As part of the sale, some $3.5 billion in proceeds were to be converted to British pounds. Ahead of the December 2011 transaction, Johnson and traders working for him stocked up on British pounds. The confidential transaction was then executed in a way that drove up the price of the pound. The move generated roughly $7.3 million in profits for the HSBC traders, while defrauding the client out of millions, the government claimed.
