Ex-HSBC Trader Made $500,000 Front-Running FX Deal, U.S. Says
(Bloomberg) -- HSBC Holdings Plc’s former head of currency trading in London made at least $500,000 in commissions by front-running a multi-billion-dollar deal that betrayed the bank’s duty to its client, according to U.S. prosecutors.
The allegations, made in court documents handed out at the start of a two-day hearing Monday, form part of the U.S. government’s petition to extradite Stuart Scott to face charges he rigged foreign-exchange markets. Scott is fighting the request, claiming American prosecutors are targeting conduct that didn’t happen or hurt anyone in the U.S.
"The defendant personally obtained over $500,000 profit," the U.S. Justice Department, represented by British lawyer Mark Summers, said in written arguments prepared for the hearing. "The offenses of which he is accused are highly serious. They involve a systematic and organized conspiracy to defraud, committed in breach of trust."
Scott was charged, along with his ex-boss Mark Johnson, by the Justice Department in July 2016 with using insider knowledge to front-run a $3.5 billion currency deal by Cairn Energy Plc that made the bank $8 million. Johnson is on trial in New York and a jury there could begin deliberations this week.
While Johnson was arrested at New York’s Kennedy Airport in 2016 before he could return to the U.K., Scott has remained free at his home in the London suburbs pending the outcome of the extradition proceedings.
Lawyers for Scott on Monday told Judge Michael Snow 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. They also raised issues of “dual criminality” -- for a person to be extradited the behavior must also be illegal in their home country.
“This is an aggressive assertion by the U.S. of its jurisdiction to try conduct which substantially occurred in the U.K.," Jonathan Caplan, Scott’s lawyer, told the court. "There was no intended or real, actual harm to the U.S."
Caplan told the court that Scott will also invoke the “forum bar” argument, which raises the question of the most appropriate jurisdiction for the requested person to be dealt with, as well as issues around human rights. In a ruling before the court broke for lunch, Judge Snow said Scott wouldn’t be allowed to introduce two experts to support his arguments.
The 45-year-old Scott, wearing a polka dot tie and gray suit, spoke only to confirm his name and date of birth.