Mark Johnson
In the FICC of it is one year old this week, and, aside from expressing surprise they got this far, Colin Lambert and Galen Stops celebrate by plunging into two of the themes covered in the first podcast that still resonate today. Stops talks about the evolution of Euronext FX and has two questions for […]
I have had a chance now to listen to the oral arguments given in the Mark Johnson appeal and while my underlying belief that this is a wrong conviction remains unshaken it is also clear to me that few involved in this case from the legal fraternity actually understand foreign exchange markets and how they […]
I have been keen in the past (appropriately so I still believe) to argue that the FX industry could do much more to help Mark Johnson fight his case and appeal against conviction for misconduct. The judges are apparently now considering whether striking down the conviction would mean a return to the “wild west” in […]
I may, not for the first time, be reading too much into a brief sentence, but I found it significant in my conversation with Simon Potter, outgoing chair of the Global FX Committee, that when talking about the review of the Code he mentioned “the handling of larger orders” as one area of possible review. […]
Written testimony has been lodged relating to former HSBC FX trading head Mark Johnson’s appeal against his conviction for wire fraud in the US and it contains a few surprises – some of which may indicate stronger implications for the FX industry than the original trial, as Colin Lambert discovers.The original trial of HSBC’s former global head of FX trading Mark Johnson was widely seen in the FX industry as being, aside from the outcome on his personal circumstances, a single issue case – what would the US legal system say about pre-hedging? The initial outcome – which is now being appealed – was a conviction and a jail sentence under the very broad umbrella of “wire fraud”, a decision that was seen as potentially having an impact on the FX Global Code, which explicitly (under certain circumstances), endorses the practice.
Written testimony has been lodged relating to former HSBC FX trading head Mark Johnson’s appeal against his conviction for wire fraud in the US and it contains a few surprises – some of which may indicate stronger implications for the FX industry than the original trial, as Colin Lambert discovers.The original trial of HSBC’s former global head of FX trading Mark Johnson was widely seen in the FX industry as being, aside from the outcome on his personal circumstances, a single issue case – what would the US legal system say about pre-hedging? The initial outcome – which is now being appealed – was a conviction and a jail sentence under the very broad umbrella of “wire fraud”, a decision that was seen as potentially having an impact on the FX Global Code, which explicitly (under certain circumstances), endorses the practice.
The news this week that the US government has failed to prosecute another FX trader is yet another indication of both the eagerness of the authorities there to have a “head” to represent the general misconduct of bankers, as well as those same authorities’ lack of understanding as to how the FX market works. In this case, as well as that of Mark Johnson, there is more than enough evidence to indicate the “customer” knew perfectly well how the FX market operates and therefore were most definitely not “victims”.
There’s something for everyone in this week’s In the FICC of It podcast as Colin Lambert and Galen Stops traverse the US legal system, trading, crypto and China.
Listen in as Lambert explains why he is mystified at the prosecution’s flip-flop in the Mark Johnson case and angry at the FX industry’s previous lack of effort to explain how markets work to the US legal authorities; and Stops takes a look at a new report n his favourite industry – CTAs. Having had the data explained to him, Lambert also thinks he knows why some CTA sectors are doing well and some aren’t, so that’s another of his “theories” then…
Our podcasters then move onto debate whether crypto markets will evolve to an OTC model and whether this would be a good thing for attracting institutional money to what is still a relatively nascent market.
Stops closes out by reporting from an analysts’ briefing this week that highlighted a change in approach on the part of China to its programme of liberalisation of the yuan.
I have previously argued that the FX industry needs to pay attention to the outcome of the Mark Johnson trial. Reading through the appeal documents, however, indicates the stakes have been raised. The prosecution’s original case was, in my opinion, flawed when looking at how the FX market works, but the new charges take this to a new level and they throw into a harsher light the reluctance of certain trade associations to engage and educate the US authorities earlier in this case – we can only hope it is not too late.
The defence team conducting former HSBC FX trading head Mark Johnson’s appeal against his conviction in late 2017 have filed their appeal brief to the US Court of Appeal, in which they argue that the US Government’s brief offers, “…the latest flavour of the prosecution’s many ever-shifting, imprecise, and contradictory attempts to explain just what, exactly, the crime here was, and it exposes why there was none.” It highlights a series of new arguments put forward by the Government that were not heard by the jury, as well as a series of back tracks by the prosecution side.
