A currency manager, ECU Group has accused the multinational investment bank, HSBC of fraud and misconduct within its foreign exchange (Forex ) trading desk between 2004 and 2006. According to a report published by the Financial Times, quoting a hearing at the UK High Court on Monday, an alleged 'rotten culture' between such a period allowed bankers to misuse confidential data.
In fact, the ECU Group claims that HSBC is responsible for having committed fraud related to 52 forex trades it placed with the bank in those years. The allegations were made in the context of a trial that expects to last for at least seven weeks. The banking giant denied all the claims made by the currency manager, the FT said.
But, this is not the first time the group made similar accusations against the British multinational investment bank. In February 2006, ECU Group said that HSBC traders incurred misconduct, allegedly having traded using confidential information of an upcoming client order. “It also alleges that HBPB, HSBC’s private bank, engaged in ‘pip theft’ where it added secret ‘pips’ or mark-ups to execution prices reported to ECU so as to secure an unlawful profit,” the Financial Times added. The group is an HSBC customer.
Reminding 2013 Forex Manipulation Scandal Case
After conducting an internal investigation on alleged unusual forex price movements during that year, HSBC found no evidence of misconduct. “ECU’s case is that HSBC’s foreign exchange trading desk between 2004 and 2006 were rotten. Traders treated clients’ orders as an opportunity for self-enrichment,” Richard Lissack QC, lawyer of ECU Group, alleged during Monday’s court hearing.
However, HSBC refuted allegations on the lawsuit, saying the following regarding the ECU’s current legal process against them: “[it is] a farrago of contrived and legally incoherent claims.”
In 2013, the banking giant faced a scandal related to forex market manipulation. At that time, HSBC had to pay around $393 million in fines to the UK Financial Conduct Authority (FCA) and $276.5 million to the US Federal Reserve.
Last month, Finance Magnates reported that HSBC exited from the US mass retail banking market.
