The US Federal Reserve has moved to ban Mark Johnson, global head of
spot FX trading at HSBC, and Stuart Scott, the bank’s former head spot trader for
According to court documents, the Fed argues that both mens’ continued service or participation in the
conduct of the affairs of any relevant depository institution posed, poses, or
may pose a threat to the interests of depositors of such institution, or
threatened, threatens, or may threaten to impair public confidence in such
The ban stays in
place until either the case is settled formally in a court of law or if the
governors of the Federal Reserve decide to rescind it.
The Fed’s notice makes similar allegations to those cited in a US
Justice Department notice issued when it arrested Johnson and brought
an action against him and Scott relating to trading activity around a
customer order for Cairn Energy in 2011.
The Fed says that based upon audio recordings and “other evidence”, the
respondents traded ahead of the order to the detriment of the customer.
In the note the Fed states, “Continued participation by Respondents in the affairs of HSBC may
threaten to impair public confidence in HSBC. As a result of the Respondents’
misconduct described in the Indictment, numerous news articles have noted that
the criminal proceedings have further damaged the reputation of HSBC both in
the United States and globally. Respondents’ involvement with HSBC’s FX trading
activities as stated in the Indictment generated, and will likely continue to
generate, adverse publicity for HSBC.”
This is the second
such action taken by the Federal Reserve this year, in August it
also barred former Barclays trader Chris Ashton, a member of the now
notorious Cartel chat room.