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Feds charge HSBC bankers in currency scheme

Feds charge HSBC bankers in currency scheme
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The Justice Department is charging two executives from HSBC Bank over an alleged $3.5 billion currency scheme.

The traders, Mark Johnson and Stuart Scott, both British citizens, are being accused of taking part in a 2011 conspiracy over foreign exchange transactions that netted them and their bank $8 million at the expense of a client.

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“The defendants allegedly betrayed their client’s confidence, and corruptly manipulated the foreign exchange market to benefit themselves and their bank,” Assistant Attorney General Leslie Caldwell said in a statement on Wednesday.

The DOJ alleges that when a client hired HSBC to convert $3.5 billion into British pounds, the pair used that confidential information to their own benefit. The client's planned transactions would have changed the price of the pound in currency markets. The traders allegedly acted to profit themselves before carrying out the client's orders.

The scheme, known as "front-running," boosted their profits at the client's expense.

“As alleged, the defendants placed personal and company profits ahead of their duties of trust and confidentiality owed to their client, and in doing so, defrauded their client of millions of dollars,” U.S. Attorney Robert Capers said in a statement.

“When questioned by their client about the higher price paid for their significant transaction, the defendants wove a web of lies designed to conceal the truth and divert attention away from their fraudulent trades."

Johnson was arrested late Tuesday at JFK International Airport in New York City.