Finance

Federal Reserve bans former HSBC traders from banking industry

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The Federal Reserve has barred two former HSBC traders from employment in the banking industry, citing concerns over their recent criminal indictments, the central bank said Thursday.

Mark Johnson and Stuart Scott, former heads of foreign exchange trading at the British bank, face U.S. charges of committing wire fraud in a $3.5 billion currency deal made in 2011.

{mosads}The Justice Department said the men, both British citizens, used inside information to front-run the deal, which involved trading dollars to pounds, to make $8 million in profit for HSBC.

The Federal Reserve said it issued the ban on Johnson and Scott because the criminal charges against them could erode confidence in any bank that might employ the men.

“Given the indictment, Johnson’s and Scott’s continued participation in any depository institution may threaten to impair public confidence in that institution,” the central bank said Thursday.

The ban is effective until the criminal charges against the men are “resolved or disposed of.”

The Office of the Comptroller of the Currency also suspended Johnson from the industry.

Federal Reserve Chairwoman Janet Yellen last month promised lawmakers that the agency would step up its oversight of compliance at large banks, saying “there has been a very disturbing pattern of violations” in businesses such as foreign exchange trading and mortgage lending.

Johnson and Scott were the first individuals to be charged in connection to a lengthy U.S. government investigation into alleged rigging of the $5 trillion foreign exchange market.

Six banks paid $5.8 billion over the probe last year. HSBC was not part of the settlement.

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