HSBC currency chief out after forex rigging scandal

 

Russell Lynch
Thursday 11 December 2014 01:46
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HSBC, Europe’s biggest bank, has sacked its European currency trading chief in the wake of a huge $618m (£394m) fine for manipulating the £3.3trn a day foreign exchange market, it emerged yesterday.

Stuart Scott was “let go” on Tuesday, following the record-breaking fines for HSBC and five other banks, who were fined a total of £2.6bn. Barclays has yet to settle.

HSBC declined to comment but Mr Scott is the third senior currency dealer at the bank to pay for the scandal with his job. Edward Pinto was fired in October along with Serge Sarramegna, head of its spot foreign exchange desk in London. Both had been suspended since the start of the year.

HSBC was hit with the combined fines from the Financial Conduct Authority and the US Commodity Futures Trading Commission in November.

Forex fixing was the latest in a long line of scandals to embarrass a tainted industry since the financial crisis – including the manipulation of interbank lending rates and gold prices as well as mis-selling of payment protection insurance.

The regulators published lurid details of how the traders gave themselves childish names (“the A-Team”, “the Three Musketeers”) as they worked together to rig the values of major currency rates in order to boost their profits.

News of Mr Scott’s departure came as Asian-facing Standard Chartered admitted that it will have US monitors in its New York offices for another three years following a huge $327m fine for violating sanctions in place against Iran, Sudan and two other countries in 2012.

The move is part of an extension to its “deferred prosecution agreement” with the New York County district attorney and the US Department of Justice until 2017. The news will come as a fresh blow to beleaguered chief executive Peter Sands, who is under pressure to improve performance after three profit warnings in a year. The bank’s share price has slumped to two-year lows.

Its new financial crime committee will try to combat practices including bribery and money laundering.

The Mexico connection: Record $1.92bn fine

HSBC’s huge fine for currency rigging is dwarfed by its record $1.92bn in fines to US authorities in 2012, for allowing itself to be used to launder drug money from Mexico, according to the US Department of Justice. Bank officials repeatedly ignored internal warnings that HSBC’s monitoring systems were inadequate.

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