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By Nate Raymond
NEW YORK, Oct 21 (Reuters) - The United States will seek theextradition from Britain of a former HSBC Holdings Plc executive accused of participating in a fraudulent schemeinvolving a $3.5 billion currency transaction, prosecutors saidon Friday.
In a letter filed in federal court in Brooklyn, prosecutorssaid the U.S. government will initiate formal proceedings toseek Stuart Scott's extradition after learning he did not wishto come to the United States voluntarily to face the charges.
The U.S. Justice Department has begun the process ofpreparing an extradition package for the State Department tosubmit to the United Kingdom, the letter said.
A lawyer for Scott, who currently resides in Hertfordshire,England, did not immediately respond to requests for comment.
Scott, HSBC's former head of cash trading for Europe, theMiddle East and Africa, was charged in July along with MarkJohnson, a British citizen who was HSBC's global head of foreignexchange cash trading and who was arrested in New York.
The men are believed to be the first individuals to faceU.S. criminal charges arising from a probe of foreign-exchangerigging at banks.
The probe led to four banks last year pleading guilty toconspiring to manipulate currency prices. HSBC was not amongthose banks, but in 2014 agreed to pay $618 million to resolverelated probes by U.S. and British regulators.
The U.S. Justice Department has continued to investigate,and HSBC has set aside $1.2 billion to cover variousforex-related matters.
Prosecutors said Johnson and Scott in 2011 misusedinformation provided by a client that hired HSBC to convert $3.5billion to British pounds in connection with a planned sale ofthe client's foreign subsidiaries.
They then used their insider knowledge to trade ahead of thetransaction, causing a spike in the price of the currency thathurt HSBC's client, prosecutors said.
The client was not named in court papers, but a source hassaid it was British oil firm Cairn Energy.
In total, HSBC earned $3 million from trades its currencytraders placed, and $5 million from executing the transaction,prosecutors said.
Johnson has pleaded not guilty and is free on bail. Scott'slawyer in Britain, Gerallt Owen, has said he denies theallegations.
The case is U.S. v. Johnson et al, U.S. District Court,Eastern District of New York, No. 16-cr-00457.
(Reporting by Nate Raymond in New York; Editing by Tom Brown)
