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By Brendan Pierson
NEW YORK, Sept 12 (Reuters) - A U.S. appeals court on
Thursday upheld the conviction of a former HSBC Holdings Plc
executive who was sentenced to two years in prison for
defrauding Cairn Energy Plc in a $3.5 billion currency
trade.
A unanimous three-judge panel of the 2nd U.S. Circuit Court
of Appeals in Manhattan ruled that a jury had enough evidence to
find that Mark Johnson, formerly head of HSBC’s global foreign
exchange cash trading desk, withheld material information from
Cairn.
A lawyer for Johnson could not immediately be reached for
comment. A spokesman for the prosecutors declined to comment.
Johnson, a British citizen, was convicted of fraud in
October 2017 in a federal court in the New York City borough of
Brooklyn after a nearly four-week trial. He was the first banker
to be tried in the United States as a result of worldwide
investigations of the multitrillion-dollar per day currency
market.
The probes have led to billions of dollars in fines against
several banks and the firing of dozens of traders.
According to court filings, Cairn hired HSBC in 2011 to
convert $3.5 billion into British pounds sterling in connection
with the sale of an Indian subsidiary.
U.S. prosecutors said Johnson and another former HSBC
executive, Stuart Scott, devised a scheme to drive up the price
of pounds by executing a series of trades before carrying out
the trade for Cairn.
Such trading in advance of a client's order to make a profit
is known as "front-running."
On appeal, Johnson argued that front-running is not illegal
and that the deal was beneficial to Cairn.
"But Johnson was not convicted of frontrunning," the appeals
court wrote Thursday. "He was convicted of making material
misrepresentations to Cairn about how HSBC would trade ahead of
the fix and the price would be determined."
Evidence that Johnson had misled Cairn was enough to support
the conviction, the court found.
U.S. prosecutors also charged Scott, but Britain's Supreme
Court last year blocked his extradition to the United States.
Johnson had chosen not to fight extradition.
(Reporting by Brendan Pierson in New York
Editing by Matthew Lewis)
