HSBC near to settlement over Republic fraud suit
HSBC could settle within days a legal dispute against Republic New York, which it inherited when it purchased the bank in 1999 from the billionaire financier Edmond Safra.
The lawsuit alleges that several large Japanese corporate clients were defrauded of some $1bn by Martin Armstrong, a rogue fund manager and commodities dealer who is now in prison. Mr Armstrong, who protested his innocence, was the biggest customer of Republic's futures brokerage in 1995 and was accused of using investors' money to cover other clients' debts worth $950m while clocking up about $400m in trading losses, mostly by making bad calls against the yen.
HSBC set aside $79m in its results for its third quarter this year, with a further $575m being provided for in the fourth. The provisions sent HSBC's US unit into a loss of $167m for the three months ended 30 September.
HSBC declined to comment on the progress of any settlement but said any related charge would not exceed the existing provisions.
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