Ex-HSBC FX Trader Scott Loses U.K. Bid to Block Extradition
(Bloomberg) -- HSBC Holdings Plc’s former head of currency trading in London can be extradited to the U.S. to face fraud charges, a London court ruled, three days after his old boss was convicted over the same allegations.
Stuart Scott said he would appeal as soon as Judge Michael Snow ruled against his bid to stay in the U.K., continuing to insist he’d done nothing wrong.
“We do not believe that the circumstances, if properly analyzed, constitute any criminal offense when applying U.K. law,” Scott said in a written statement, handed out in court by his lawyer. “This case is unique in that it is a U.K. centric case, and represents a far too aggressive assertion of the U.S. jurisdiction.”
The 45-year-old was charged, along with his ex-boss Mark Johnson, by the U.S. Justice Department in July 2016 with front-running a $3.5 billion currency order from Cairn Energy Plc in 2011 that made the bank $8 million in profits. Johnson, 51, was convicted by a New York jury on Monday and will be sentenced in the coming weeks. Each of the nine counts he was found guilty on carries a maximum 20-year prison sentence, though he will likely receive a much shorter term.
Snow rejected Scott’s arguments last week about where the conduct occurred, stating that “the effect of his actions were felt” in the U.S. He also dismissed claims that the request was an abuse of process because the U.S. had described the conduct inaccurately.
The ruling must still be signed-off by U.K. Home Secretary Amber Rudd, though this is largely seen as a rubber stamp. Rudd has two months to approve the extradition.
While Johnson was arrested at New York’s Kennedy Airport in 2016 before he could return to the U.K., Scott remained free at his home in the London suburbs until June. At his extradition hearing last week Scott’s lawyers attempted to persuade the judge the Justice Department had misrepresented the behavior and was attempting to regulate conduct that didn’t occur or cause any harm in the U.S.
Family, Health Issues
Scott’s family has a number of health issues and he and his wife have four teenage children between them. He was the sole caregiver for his two biological children from a very young age, according to the ruling.
“The seriousness of the allegations and the public interest in honoring this country’s international obligations satisfies me that, despite the sad personal circumstances of the defendant and his family,” extradition is warranted, Snow said.
In arguments filed with the court, Scott said he was interviewed by HSBC’s external lawyers three times in 2014 as part of an internal investigation into foreign-exchange practices. Regulators globally started probing the sector in 2013 after Bloomberg News reported traders were colluding to manipulate benchmark currency rates and profit at clients’ expense.
Scott was told his interviews may be shared with the U.K. Financial Conduct Authority, which fined HSBC 216 million pounds ($285 million) in 2014 for failures in its systems and controls around currency trading but didn’t take any individual action against him. Scott was also interviewed by the Justice Department that year. Seven banks paid about $10 billion in fines to U.K., U.S. and Swiss authorities over the failings in 2014 and 2015.
At another London court Thursday, a currency firm is trying to force HSBC to hand over crucial documents to support a lawsuit over possible rigged transactions. ECU Group Plc is seeking the documents as it uses Johnson’s conviction to revive a civil lawsuit related to the allegations.
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