HSBC can’t dodge DoJ’s $63m fine for major FX up
HSBC has been hit by a $63.1 million fine as part of a three-year deferred prosecution agreement with the US Department of Justice (DoJ) to resolve its investigation into the bank’s historical foreign exchange (FX) sales and trading activities within its global markets business.
Under the agreement, HSBC will pay a total of $101.5 million, including $38.4 million in restitution and the aforementioned fine.
The bank says the payment reflects a 15% reduction in the fine amount in “recognition of HSBC’s co-operation during the investigation and its extensive remediation”. The payment has already been fully provided for as disclosed in HSBC’s 2016 Annual Report and Accounts and the Interim Report 2017.
As is usual in these cases, banks trot out the same old lines. HSBC says it has also agreed to take “additional steps to enhance its global markets compliance programme and internal controls and agreed to cooperate fully with regulatory and law enforcement authorities”.
The conduct described in the agreement occurred in 2010 and 2011.
According to HSBC, its improvements include implementing algorithmic trading to manage risk around benchmark orders; updating its policies for sales, pricing, order handling and managing confidential client information; and engaging outside firms to audit its internal controls.
This agreement follows earlier settlements relating to HSBC’s FX trading business with the UK Financial Conduct Authority (FCA) and US Commodity Futures Trading Commission in November 2014 and with the US Federal Reserve Board in September 2017 related to controls and procedures.