HSBC banker arrested at JFK in trading scheme

Janet Yellen: We don't need to break up the banks
Janet Yellen: We don't need to break up the banks

A top currency trader at HSBC was arrested at New York's Kennedy Airport Tuesday night as he prepared to leave the country.

Since the financial crisis seven years ago, the world's largest banks have paid billions in fines to settle charges of various misdeeds. But very few individual bankers have been held responsible for their roles in those illegal schemes.

But on Wednesday, two HSBC traders were hit with criminal charges related to their trading in 2011.

Mark Johnson, the global head of HSBC's foreign-exchange cash trading unit, was arrested Tuesday night. The 50-year-old banker, who is a British citizen and resident of both the U.S. and U.K., is due to appear in federal court in Brooklyn Wednesday. A complaint against Stuart Scott, a former trader on Johnson's desk, 43, was also unsealed Wednesday, but his whereabouts are undisclosed.

Related: HSBC pays $1.6 billion to end 14-year legal battle

The complaint charges that on multiple occasions Johnson and Scott executed trades in a way that drove up costs for their client and produced more profits for the bank. As a result, HSBC made an extra $8 million on $3.5 billion in trades.

"The defendants placed personal and company profits ahead of their duties of trust and confidentiality owed to their client, and in doing so, defrauded their client of millions of dollars," stated United States Attorney Robert Capers.

HSBC declined to comment on the matter.

HSBC had already reached a settlement to pay U.S. regulators $275 million and $343 million to U.K. regulators as part of a joint probe into currency market manipulation. HSBC was one of five banks that settled with the two agencies over their manipulation.

The arrest comes the day after the Federal Reserve banned Matthew Gardiner, a former FX trader at both Barclays and UBS, from the U.S. banking industry for his role in manipulating foreign exchange markets. The order banning Gardiner said that he is cooperating with authorities, providing testimony, documents, records and other evidence against other bankers.

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