Finance News

Second HSBC banker to face trial in $3.5bn fraud case

Rozi Jones
|
27th October 2017
judge hammer scales legal
"Today’s judgment demonstrates the relative ease with which City professionals can be extradited from the UK to the US on allegations of financial misconduct."

Westminster Magistrates' Court has ruled that Stuart Scott, former HSBC head of currency trading, can be extradited from the UK to face fraud charges in New York.

Scott's former boss, Mark Johnson, was convicted by a US jury earlier this week for his role in the scheme and is awaiting sentencing.

Scott and Johnson, the former head of global foreign exchange cash trading at HSBC, were charged in July 2016 with conspiring to defraud a client by rigging the $3.5bn foreign exchange trade.

According to the evidence presented at Johnson's trial, both employees cheated an HSBC client out of millions of dollars by misusing confidential information he received about the client’s transaction.

The evidence shows that the pair caused the $3.5 billion foreign exchange transaction to be executed in a manner that was designed to spike the price of the Pound Sterling, to the benefit of HSBC and at the expense of their client.

In total, HSBC generated profits of roughly $7.5 million from its execution, including profits generated from the front running conduct by Johnson, Scott, and other traders whom they directed.

In a statement, Scott maintained his innocence and said he planned to appeal the ruling.

Andrew Smith, Partner at criminal law firm Corker Binning, commented: "Today’s judgment demonstrates the relative ease with which City professionals can be extradited from the UK to the US on allegations of financial misconduct.

"The two countries enjoy a long-standing and trusted extradition relationship. It is an uncontroversial principle that jurisdiction can be founded in the country where the harm of the alleged criminality was felt.

"Extradition lawyers in the UK know all too well that our judges will adopt a flexible interpretation of the conduct alleged in the extradition request in order to satisfy themselves that there is an equivalent UK offence. Given these risks, when faced with a US extradition request, a client should always be advised by UK and US lawyers about the merits of foregoing a protracted extradition battle and instead agreeing a negotiated return with bail conditions."

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