US charges two HSBC executives over forex-related scheme

A senior HSBC Holdings Plc  manager has been arrested and charged alongside a former foreign exchange executive with engaging in a scheme to front-run a $3.5 billion transaction by one of the bank's clients, U.S. prosecutors said.

Mark Johnson, HSBC's global head of foreign exchange cash trading in London, and Stuart Scott, its ex-head of cash trading for Europe, the Middle East and Africa, were charged in a criminal complaint filed in federal court in Brooklyn, New York.

Prosecutors said the executives, who are both British citizens, misused information provided to them by a client that had hired HSBC to convert $3.5 billion to British pounds in connection with a planned sale of one of the unnamed company's subsidiaries.

Johnson, 50, and Scott, 43, used their insider knowledge to buy sterling in order to front-run the transaction, resulting in a spike in the price of the currency that was detrimental to HSBC's client, prosecutors said.

"The defendants allegedly betrayed their client’s confidence, and corruptly manipulated the foreign exchange market to benefit themselves and their bank," Assistant Attorney General Leslie Caldwell said in a statement.

In total, HSBC generated $8...