The Federal Reserve Board (FRB) has prohibited two former foreign exchange (FX) traders from working in the banking industry. Both persons, Mark Johnson and Stuart Scott were managers at London-based HSBC Bank plc, a subsidiary of HSBC bank Johnson had been a managing director and the global head of FX cash trading. Scott reported to Johnson and had managed the bank's FX trading for Europe, the Middle East, and Africa.
The FRB's press release explained the reasons for its actions:
"Mark Johnson and Stuart Scott, former senior HSBC managers, were recently indicted for criminal wire fraud in connection with their trading activities... According to the indictment, Johnson and Scott made multiple misrepresentations to an FX client of HSBC in connection with a large pre-arranged currency transaction. The indictment also alleges Johnson and Scott engaged in conduct to trade to the detriment of HSBC's client and for their own (and HSBC's) benefit... the Board found that given the indictment, Johnson's and Scott's continued participation in any depository institution may threaten to impair public confidence in that institution."
The U.S. Department of Justice filed criminal charges on July 16, 2016 against Johnson and Scott in U.S. District Court for the Eastern District of New York. On August 16, 2016, a federal grand jury indicted Johnson and Scott with multiple counts of wire fraud and conspiracy to commit wire fraud. The alleged fraud happened during November and December, 2011, in part, in New York City at the offices of HSBC Bank USA National Association, a unit of HSBC.
HSBC Bank plc is a unit of HSBC Holdings plc (HSBC). HSBC's website says it has 4,400 offices in 71 countries that serve 46 million customers worldwide. Bloomberg described HSBC Bank plc's activities:
"HSBC Bank plc provides various banking products and services worldwide. The company operates through Retail Banking and Wealth Management, Commercial Banking, Global Banking and Markets, and Global Private Banking segments. It accepts various deposits, such as current, savings, and business bank accounts..."
The prohibition is effective immediately and until the criminal charges against Johnson and Scott are resolved.