Gregory Asciolla comments on wire fraud scandal committed by former bank employees
The Department of Justice (DOJ) has charged Stuart Scott, the former HSBC employee, and his former supervisor, Mark Johnson, with conspiracy to commit wire fraud, for allegedly front-running a client's $3.5 billion currency trade in 2011, which reaped $8 million in profits for the bank at the client's expense. The two men are the first individuals to be charged in the DOJ’s long-running investigation into banks' manipulation of the $5.3 billion-a-day FX markets. The criminal complaint, unsealed on July 20, adds new damage for HSBC. The bank and 15 others have paid out more than $12 billion in combined penalties in regulatory and civil claims concerning the probe.
The complaint is already a milestone for the DOJ and the Federal Deposit Insurance Corporation, which is assisting the investigation, as prosecutors have begun to chip away at the logos of these banking institutions to reveal the human faces behind alleged corporate wrongdoing—a key step in the pursuit of holding individuals accountable for unfairly profiting from their customers.
Lawyers say the U.S. has jurisdiction to pursue Scott and Johnson, because the complaint alleges a portion of the fraud occurred on December 5, 2011, while Johnson was in New York.
Gregory Asciolla, Co-Chair of Labaton Sucharow's Antitrust and Competition Litigation Practice, said, "Once the UK made antitrust violations a crime, it then made it possible to extradite people from there to here for antitrust crimes affecting the U.S. It appears in this case, however, [that] prosecutors have alleged wire fraud, which is also an extraditable criminal offense."
"It is not something that happens very quickly, because it is a sensitive issue to extradite citizens from one country to another. It's got all kinds of ramifications, including political ones that go beyond the legal ones. You are forcibly removing a citizen of one sovereign country to potentially be put in custody in another country for crimes committed in another country. This raises significant political, legal and sovereignty issues—all of this is taken into consideration," Asciolla added.