$101.5 Million in Penalties Paid by HSBC

The Department of Justice (DOJ) recently closed the investigation on UK-based financial institution, HSBC Holdings Plc., and held them accountable for their participation in a multi-million dollar fraud scheme known as “front-running” involving a client named Cairn Energy in 2011 and a separate client in 2010.  Between the two engagements, HSBC made about $46 million in illegal trades.

The currency traders at HSBC involved in the Cairn’s case bought British money prior to processing the transaction which ultimately led to Cairn spending more money on the transaction and creating profit for the bank.  

HSBC paid a criminal penalty of $63.1 million and a disgorgement and restitution fine of $38.4 million.  Additionally, HSBC agreed to enter a Deferred Prosecution Agreement (DPA) for three years.  The bank is also taking measures to implement better compliance technology and resources by improving their systems and terminating the employment of employees associated with the crime.  HSBC gained cooperation credit for improving their conduct and providing substantial information when necessary.


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