A British money-trader has been convicted in New York for an illegal trade involving a deal to exchange $3.5 billion into £2.25 billion in sterling for a Scottish oil company.
Edinburgh-based Cairn Energy was transferring proceeds from the sale of a subsidiary in India and had hired HSBC to carry out the deal in 2011.
Mark Johnson, 51, was accused of exploiting confidential information from Cairn Energy in 2011 to “front run” the oil and gas firm in the currency markets, thus making an £6 million profit for HSBC – where he was formerly head of HSBC’s global foreign exchange cash trading desk – at Cairn’s expense.
He bought sterling ahead of client Cairn Energy’s order, forcing the oil and gas firm to pay a higher price.
Johnson was found guilty after being tried for nearly four weeks in a federal court in Brooklyn, New York. He will be sentenced at a later date.
During the trial, jurors heard numerous tape recorded phone calls between Johnson and others discussing the trade. In one call, Johnson told Cairn Energy and its financial advisor after the illegal trade that a “Russian buyer had been responsible for a spike in the price’ of pounds. Prosecutors said that was a lie.
Meanwhile, the US authorities have issued a warrant for the arrest of Johnson’s former HSBC co-worker Stuart Scott, the then head of foreign exchange trading for Europe, who left HSBC in late 2014.
Scott – who lives in a £3 million family home in Hertfordshire with his wife and six bairns – is fighting extradition to the United States to face trial.
Cairn Energy agreed an out-of-court settlement over the fraud with HSBC but chief executive Simon Thomson did not disclose the value of this deal.
Thomson – who gained a Scots law degree at Aberdeen University – is currently Chairman of Cairn Energy’s Group Risk Committee and, before being appointed as chief executive, served as Legal Director for five years.
HSBC had earlier carried out an internal review of the Cairn Energy trade and cleared the pair of wrongdoing.
Johnson, a British citizen, was the first banker to be tried in the United States as a result of worldwide investigations into the multi-trillion-dollar per day currency market. The probes have led to about $10 billion in fines against several banks and the firing of dozens of money traders.
Money traders formerly employed by JP Morgan, Barclays and Citigroup are also awaiting trial in Manhattan accused of rigging currency markets in separate cases.
25 Oct 2017