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A British trader, Mark Johnson, has had his conviction for allegedly manipulating foreign exchange rates overturned after a nine-year legal battle in the United States.
The former HSBC trader, 59, maintained his innocence since being convicted of fraud in 2017, a charge stemming from a significant foreign exchange transaction six years prior.
Johnson served time in both US federal prisons and Wandsworth prison in the UK, exhausting his appeal options before his release on license in 2022.
Following the 2023 overturning of a key law used in his prosecution, Johnson launched a renewed appeal, which was subsequently granted by a US appeal court, resulting in a full acquittal.
Alexandra Shapiro, Mr. Johnson’s US lawyer, stated, “We are delighted that justice has finally been achieved for Mark Johnson, after a nine-year ordeal. This is a case that never should have been brought.”
Prosecutors alleged that Mr. Johnson conspired with a colleague to artificially inflate the price of sterling against the dollar before executing a substantial foreign exchange trade for HSBC client Cairn Energy, involving the conversion of $3.5 billion into pounds.
The prosecution argued that Mr. Johnson, acting on behalf of HSBC, strategically purchased sterling in advance to inflate its value, allowing the bank to profit before executing the client’s trade at a higher price—a practice known as ‘front-running’.
After his conviction, ACI Financial Markets Association, a foreign exchange industry body, petitioned the court, asserting that buying a currency ahead of a large trade is standard industry practice for managing a bank’s risk, commonly referred to as ‘pre-hedging’.
“Mr. Johnson carried out the Cairn transaction consistent with industry practice and in violation of no law or rule, and he looks forward to moving on with his life,” Ms. Shapiro added.
Mr. Johnson, a father of five from Hampshire, was initially arrested on July 19, 2016, while accompanying his son and a friend to JFK Airport en route to the UK, and was subsequently tried and convicted on October 18, 2017.
His arrest occurred three days after members of Congress urged the US government to prosecute HSBC employees who had previously evaded justice.
These calls stemmed from a congressional report, Too Big to Jail, which revealed that the British government had secretly intervened on HSBC’s behalf in 2012, when the bank faced potential prosecution for aiding a Mexican drug cartel in laundering £881 million and facilitating trades with US-sanctioned countries, including Iran, Libya, and Sudan.
Senior HSBC executives had encouraged him to accept a new role in the US in March 2016, four months before his arrest. Because he was apprehended in the US, extradition proceedings were unnecessary.
In contrast, Stuart Scott, Johnson’s alleged co-conspirator, contested extradition to the US and prevailed in his hearing. The US Department of Justice subsequently dropped the charges against him.
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