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HSBC settles for millions on currency rigging

 HSBC settles for millions on currency rigging

HSBC has agreed a settlement with the US Department of Justice (DoJ) for rigged currency transactions which includes a payment of $101.5m (£72.7m).

The deal, a three-year deferred prosecution agreement which ends criminal procedures against the company, concerned the investigation into HSBC's historical foreign exchange sales and trading activities in its global markets business.

The settlement included $38.4m (£27.5) in restitution and a $63.1m (£45.2) fine, reflecting a 15 per cent reduction in recognition of the bank’s cooperation during the investigation and its "extensive remediation", HSBC said in a statement today (19 January). 

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Europe’s biggest bank agreed to enhance compliance and internal controls in its global markets programme following the incidents and to cooperate fully with the US regulator.

“HSBC is committed to ensuring fair outcomes for its customers and protecting the orderly and transparent operation of the markets,” the bank said this morning.

Today’s payment has already been provided for and was disclosed in the bank’s 2016 annual report and the interim report of 2017, it added.

The DoJ’s investigation concerned the misuse of confidential information provided to the bank by clients for its own profit in 2010 and 2011. 

HSBC saw one of its former bankers convicted last year in connection with the probe.

Mark Johnson was found guilty of defrauding client Cairn Energy in a 2011 currency trade.

The agreement with the DoJ follows earlier settlements relating to the bank’s FX trading business with the Financial Conduct Authority and US Commodity Futures Trading Commission in November 2014 and with the US Federal Reserve Board in September 2017 related to controls and procedures.

Since 2011, HSBC said it has introduced a number of measures designed to better control its global markets business, including implementing algorithmic trading to manage risk around benchmark orders; updating its policies; and engaging outside firms to audit its internal controls.

In a separate probe by US authorities in 2012, HSBC was investigated for allegations of tax avoidance by some US-based clients as a result of cross-border business conducted through the bank’s Swiss operations.

carmen.reichman@ft.com