HSBC is facing renewed legal action over alleged activities within its FX business.
According to a report in the Financial Times, which cites legal filings it has seen, global macro advisory firm ECU Group is requesting a court order the bank to hand over deal logs and other information relating to three separate stop loss orders the firm left with HSBC is 2006.
A source familiar with the matter tells Profit & Loss that ECU questioned the bank over market behaviour around the stops, but was told there was nothing untoward going on.
I have been stating in recent months that one of the challenges for the FX industry will be promoting the “good news” story that it is reforming itself, while at the same time being on the end of negative headlines around actions that allegedly took place a decade ago.
This week’s headlines around HSBC and the alleged running of stop losses is a case in point, but the accusation from ECU Group against the bank also raises an early question about one of the Global Code of Conduct’s principles.
HSBC is facing potential legal action after a UK High Court judge ordered it to hand over trading records requested by one of its former clients ECU Group. Although it initially was persuaded by HSBC to drop its complaint, ECU Group renewed its claim against the bank over stop loss orders executed in 2006, following the US Department of Justice bringing charges of wire fraud, including front running, relating to a deal HSBC executed on behalf of Cairn Energy in 2011.