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HSBC share price: Bank settles forex investigation with US

19 January 2018

The agreement, filed in a federal court on Thursday, is pending review by a US court. "The Department of Justice takes these types of cases seriously and will hold to account financial institutions and individuals that circumvent the rule of law in favor of illicit profits". HSBC was hired by Cairn Energy to trade about US$3.5 billion in proceeds of the sale to pounds. "Since the historical conduct described in the agreement, we have strengthened our controls in the global markets business, and we will continue to make further improvements".

The Justice Department said HSBC received no leniency for voluntarily disclosing the matter, adding that initially the bank's cooperation with investigators was also "deficient in certain respects".

United States officials only identified one of the two clients - the British oil and gas explorer Cairn Energy.

The penalty comes a month after the London-based bank was released from a five-year deferred-prosecution agreement with the Justice Department for helping Mexican drug cartels launder money and breaching global sanctions by doing business with Iran.

In one March 2010 transaction, it converted approximately GBP5.3 billion ($7.4 billion) to US dollars for a client - identified in court documents only as a financial-services company - that resulted in a $38.4 million profit for HSBC.

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In the settlement, HSBC also agreed to bolster its internal controls, and admitted and accepted responsibility for wrongdoing underlying two criminal wire fraud charges filed against the bank.

Under the terms of the agreement, which is under review by a federal judge in Brooklyn, HSBC will pay a US$63.1 million fine and an additional US$38.4 million in restitution and disgorgement - or the return of ill-gotten gains, the Justice Department said.

But that HSBC soon "changed course" after prodding from the government, earning "substantial cooperation credit". His sentencing is set for Feb 15.

Such agreements, a common tool in the corporate prosecutions, give the alleged wrongdoer a chance to cooperate with prosecutors in exchange for a less-punitive outcome - typically a fine, admission of wrongdoing and taking measures to improve compliance.

The investigation was conducted by the FDIC's Office of Inspector General and the FBI's Washington Field Office. The U.S. Attorney's Office for the Eastern District of NY and the Criminal Division's Office of International Affairs provided significant support.

HSBC share price: Bank settles forex investigation with US