US probe sees HSBC agree to pay $101.5m settlement fee


19 Jan, 2018

US probe sees HSBC agree to pay $101.5m settlement fee

Following a criminal investigation in the US, the UK-based bank agreed to pay the settlement fee after they accepted responsibility for some its traders misusing confidential information from clients for their own profit.

The fee of $101.5m includes a $63.1 million fine plus $38.4 million in restitution to a corporate client, which was not identified. As part of the deal with the US Department of Justice, HSBC will now enter a three-year deferred prosecution agreement, which will exempt them from criminal charges.

The probe into currency rigging by US authorities has already seen the conviction of a former banker from HSBC. Mark Johnson, was convicted of fraud in October of last year in connection with a $3.5bn currency transaction by Cairn Energy in which he was said to have deployed a tactic known as "front-running".

Johnson is currently awaiting sentencing whilst Cairn has already received $8.1m in compensation in a separate settlement. Johnson, meanwhile, continues to protest his innocence.

The so-called World’s Local Bank has suffered a string of PR disasters on both sides of the Atlantic.The US Federal Reserve fined HSBC $175m back in September over "unsound" practices in its foreign exchange business, whilst in November, Europe’s largest bank agreed to pay €300m ($353m; £266m) to French authorities to settle a long-running investigation into tax evasion by French clients.

The deal with US authorities for the latest settlement fee is also dependent on boosting its compliance programme and internal controls. They have also vowed to cooperate fully with regulatory and law enforcement authorities.

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