Federal agents surprised an HSBC Holdings Plc executive as he prepared to fly out of New York's Kennedy airport late Tuesday, arresting him for an alleged front-running scheme involving a $3.5 billion currency transaction, according to three people familiar with the matter.
Mark Johnson, HSBC's global head of foreign exchange cash trading in London, was held in a Brooklyn jail overnight and will appear in court Wednesday, one of the people said, asking not to be identified because the details of his arrest aren't public. The U.S. unsealed charges against Johnson and Stuart Scott, the bank's former head of currency trading in Europe, making them the first individuals to be charged in the long-running probe.
The arrest and charges are a coup for the Justice Department, which has struggled to build cases against individuals in its investigation into foreign-exchange trading at global banks. U.S. prosecutors once had so much confidence in the quality of evidence they were gathering thanks to undercover cooperators that in September 2014, then-Attorney General Eric Holder said he expected charges against individuals within months. The U.K. Financial Conduct Authority also found it difficult to make cases against currency traders and announced in March that it was dropping its efforts.
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