WEBVTT - Ex-HSBC FX Trader Convicted for Front-Running (Audio)

0:00:00.080 --> 0:00:02.960
<v Speaker 1>Federal prosecutors have won a huge victory today as a

0:00:03.000 --> 0:00:07.440
<v Speaker 1>Brooklyn jury convicted former HSBC currency trader Mark Johnson a

0:00:07.560 --> 0:00:10.559
<v Speaker 1>fraud for front running a three point five billion dollar

0:00:10.640 --> 0:00:13.640
<v Speaker 1>client order, forcing the client to pay a higher price.

0:00:14.200 --> 0:00:18.000
<v Speaker 1>HSBC earned eight million dollars on the deal. The prosecution

0:00:18.120 --> 0:00:21.759
<v Speaker 1>strongest evidence was recordings of phone calls between Johnson and

0:00:21.800 --> 0:00:26.000
<v Speaker 1>traders discussing the aftermath of the order. Johnson took the

0:00:26.040 --> 0:00:29.440
<v Speaker 1>stand in his own defense and insisted that he acted properly,

0:00:30.080 --> 0:00:33.320
<v Speaker 1>joining me is Lenan when Bloomberg News FX reporter and

0:00:33.400 --> 0:00:37.159
<v Speaker 1>she has been following this case, Lennon, how long did

0:00:37.159 --> 0:00:41.000
<v Speaker 1>the jury deliberated and what did they ask for during

0:00:41.040 --> 0:00:44.080
<v Speaker 1>the deliberations, Hi June. Well, they asked or they deliberated

0:00:44.080 --> 0:00:46.040
<v Speaker 1>for about two days, um, just under two days, I

0:00:46.040 --> 0:00:48.839
<v Speaker 1>would say, And they asked for tapes that Mark Johnson,

0:00:49.159 --> 0:00:51.919
<v Speaker 1>of Mark Johnson and his colleagues discussing the trades. Um.

0:00:51.960 --> 0:00:54.440
<v Speaker 1>So some of these tapes were the most sort of

0:00:54.480 --> 0:00:57.240
<v Speaker 1>incriminating evidence. We hadn't heard him saying I think we

0:00:57.280 --> 0:00:59.640
<v Speaker 1>got away with it, you know, sort of celebrating and

0:00:59.680 --> 0:01:01.440
<v Speaker 1>swear ring on the tapes, and so I think those

0:01:01.480 --> 0:01:03.720
<v Speaker 1>were pretty damning, and I guess they stuck out in

0:01:03.760 --> 0:01:07.440
<v Speaker 1>the jury's mind. Yeah, and the prosecutors certainly helped them

0:01:07.600 --> 0:01:11.640
<v Speaker 1>emphasize that what would a guilty man be doing saying this?

0:01:12.240 --> 0:01:15.280
<v Speaker 1>So Johnson, as we discussed, took a big chance in

0:01:15.360 --> 0:01:17.800
<v Speaker 1>taking the stand in his own defense. The verdict means

0:01:17.840 --> 0:01:21.440
<v Speaker 1>the jury didn't believe him. Was it the recordings that

0:01:21.480 --> 0:01:24.560
<v Speaker 1>he had the most difficulty with on the stand? I

0:01:24.560 --> 0:01:27.440
<v Speaker 1>think he was actually very calm and collected on the stand,

0:01:27.520 --> 0:01:30.000
<v Speaker 1>But I think you know what the prosecutors said to

0:01:30.040 --> 0:01:32.280
<v Speaker 1>the jury was, look, this is a different guy that

0:01:32.319 --> 0:01:34.520
<v Speaker 1>you're seeing in person versus the person that you hear

0:01:34.600 --> 0:01:38.000
<v Speaker 1>on the tapes. So it's the jury was not convinced

0:01:38.000 --> 0:01:40.360
<v Speaker 1>by his sort of calm, collected demeanor on the stand.

0:01:40.520 --> 0:01:42.600
<v Speaker 1>Did he was he able to explain away any of

0:01:42.600 --> 0:01:46.000
<v Speaker 1>the tapes? There was an explanation for everything, really, his

0:01:46.000 --> 0:01:48.520
<v Speaker 1>his lawyers went point by point through all of the

0:01:48.520 --> 0:01:52.400
<v Speaker 1>most damning evidence. They gave an alternative explanation for pretty

0:01:52.440 --> 0:01:55.680
<v Speaker 1>much everything. So it was very comprehensive, very very long

0:01:55.720 --> 0:01:58.360
<v Speaker 1>testimony by the defendant. How much time does he face

0:01:59.040 --> 0:02:01.880
<v Speaker 1>We're not sure yet, So we're we're watching and waiting

0:02:02.160 --> 0:02:05.240
<v Speaker 1>at the courthouse. Pack her Tato was actually there and so, um,

0:02:05.280 --> 0:02:07.720
<v Speaker 1>you know, he's convicted on almost all of the counts,

0:02:07.760 --> 0:02:10.320
<v Speaker 1>so we'll have to wait and see what the potential

0:02:10.360 --> 0:02:15.720
<v Speaker 1>sentencing is now. The prosecutors are also trying to get

0:02:16.120 --> 0:02:21.640
<v Speaker 1>someone else from HSBC tried in this country. He's in England.

0:02:21.680 --> 0:02:23.840
<v Speaker 1>What's the status of that, So we are still waiting

0:02:23.880 --> 0:02:26.520
<v Speaker 1>to hear the decision on that as well. Stewart Scott,

0:02:26.520 --> 0:02:28.120
<v Speaker 1>who was hurt in many of these tapes in the

0:02:28.160 --> 0:02:31.320
<v Speaker 1>courtroom in the US, is fighting extradition and so he's

0:02:31.360 --> 0:02:33.360
<v Speaker 1>that that's still pending in the UK right now. But

0:02:33.440 --> 0:02:37.000
<v Speaker 1>he was basically Mark Johnson's guy in London handling a

0:02:37.040 --> 0:02:39.680
<v Speaker 1>lot of the trading over there, and so the kind

0:02:39.680 --> 0:02:42.360
<v Speaker 1>of main front line trading was handled by Stewart's gotten

0:02:42.400 --> 0:02:45.600
<v Speaker 1>some of Johnson's colleagues and Johnson sort of blamed him

0:02:45.600 --> 0:02:47.919
<v Speaker 1>at different points for or said that he was really

0:02:47.960 --> 0:02:51.040
<v Speaker 1>the one running at all. Exactly. Well, Johnson was, you know,

0:02:51.400 --> 0:02:53.040
<v Speaker 1>was on a business trip in New York and so

0:02:53.080 --> 0:02:55.919
<v Speaker 1>he said, look, I wasn't looking at the blow by blow,

0:02:55.960 --> 0:02:57.799
<v Speaker 1>I wasn't right in front of my screens. There were

0:02:57.800 --> 0:03:00.240
<v Speaker 1>people in London who were listening to the che atdter

0:03:00.360 --> 0:03:02.720
<v Speaker 1>and and the tone of the trading room, and they

0:03:02.720 --> 0:03:05.480
<v Speaker 1>were the ones who are really managing the frontline stuff.

0:03:05.880 --> 0:03:08.480
<v Speaker 1>So Johnson is the first person to be tried in

0:03:08.520 --> 0:03:13.200
<v Speaker 1>the global currency raking scandal. How important is this conviction

0:03:13.320 --> 0:03:16.840
<v Speaker 1>for federal prosecutors. I think this is a huge landmark,

0:03:16.960 --> 0:03:20.080
<v Speaker 1>both for the prosecutors and for the industry. Many people

0:03:20.080 --> 0:03:23.360
<v Speaker 1>who have spoken to who are too uncomfortable to talk

0:03:23.400 --> 0:03:26.080
<v Speaker 1>on the record, have said, look, we're watching this very closely.

0:03:26.120 --> 0:03:28.760
<v Speaker 1>This is a litmus test if he's the first individual

0:03:28.840 --> 0:03:31.839
<v Speaker 1>to really be held uh, you know, accountable for this

0:03:32.160 --> 0:03:34.440
<v Speaker 1>as a crime for you know, just as an individual

0:03:34.520 --> 0:03:37.680
<v Speaker 1>rather than as a firm. Um, many traders out there

0:03:37.680 --> 0:03:42.600
<v Speaker 1>will be thinking what about me? So Lennon, explain exactly

0:03:42.680 --> 0:03:45.520
<v Speaker 1>what it is that traders are now concerned about. What

0:03:45.560 --> 0:03:48.040
<v Speaker 1>it is they're worried about doing well. First of all,

0:03:48.080 --> 0:03:50.920
<v Speaker 1>they're worried about a huge compliance avalanche that's going to

0:03:51.000 --> 0:03:53.600
<v Speaker 1>come down on them. Um. I think banks right now,

0:03:53.680 --> 0:03:56.640
<v Speaker 1>there there were banks in the courtroom also watching these proceedings,

0:03:56.680 --> 0:03:59.720
<v Speaker 1>So they should be thinking, Okay, what are our practices.

0:03:59.800 --> 0:04:02.240
<v Speaker 1>Let's review all of our practices again. There is a

0:04:02.280 --> 0:04:04.720
<v Speaker 1>code of conduct and foreign exchange that has you know,

0:04:04.880 --> 0:04:07.160
<v Speaker 1>prompted this review, but maybe we need to look at

0:04:07.200 --> 0:04:10.240
<v Speaker 1>it again. Pre hedging is a very very common practice

0:04:10.240 --> 0:04:12.280
<v Speaker 1>in foreign exchange. You get a big order, you need

0:04:12.360 --> 0:04:15.560
<v Speaker 1>to kind of manage your exposure beforehand. How do you

0:04:15.640 --> 0:04:18.920
<v Speaker 1>trade in advance of a client order without typical into

0:04:19.000 --> 0:04:22.320
<v Speaker 1>what Mark Johnson what's convicted of doing, which is front running.

0:04:23.160 --> 0:04:27.080
<v Speaker 1>HSBC wasn't accused of wrongdoing, but the bank has been

0:04:27.200 --> 0:04:32.400
<v Speaker 1>under investigation over currency trading. What's happening in that sphere? Well,

0:04:32.440 --> 0:04:36.640
<v Speaker 1>I think the bank There are multiple legal actions right

0:04:36.640 --> 0:04:39.400
<v Speaker 1>now in foreign exchange, not just with HSBC but also

0:04:39.480 --> 0:04:44.160
<v Speaker 1>with DOEORRGE Bank and other banks UM and the general

0:04:44.320 --> 0:04:47.719
<v Speaker 1>global scene on banking after the the FX scandal is

0:04:47.760 --> 0:04:50.400
<v Speaker 1>that the banks have paid about ten billion dollars all

0:04:50.400 --> 0:04:54.120
<v Speaker 1>in all UM to deal with these kind of rigging allegations.

0:04:54.200 --> 0:04:56.760
<v Speaker 1>So we're going to have to see whether they get

0:04:56.800 --> 0:05:00.680
<v Speaker 1>find more, whether they are worried about additional cases coming

0:05:00.720 --> 0:05:04.000
<v Speaker 1>through UM and whether more individuals are going to be

0:05:04.120 --> 0:05:08.320
<v Speaker 1>put on the stand, and what's the next trial coming up? UM?

0:05:08.400 --> 0:05:10.800
<v Speaker 1>Next trial, I think again Stewart Scott is going to

0:05:10.839 --> 0:05:13.040
<v Speaker 1>be the one to watch here because he's the one

0:05:13.120 --> 0:05:15.679
<v Speaker 1>who was, you know, right in there with Mark Johnson

0:05:15.680 --> 0:05:18.240
<v Speaker 1>on all these tapes, and so if Johnson has been

0:05:18.279 --> 0:05:20.839
<v Speaker 1>found guilty, then uh, you know, perhaps he is the

0:05:20.880 --> 0:05:23.440
<v Speaker 1>next Domino um and then you know, we go from

0:05:23.440 --> 0:05:26.680
<v Speaker 1>there for two days of hearings for extradition, which is

0:05:26.839 --> 0:05:29.840
<v Speaker 1>a lot of time. So we'll be watching. You'll tell

0:05:29.920 --> 0:05:32.880
<v Speaker 1>us what happens, and it'll be really interesting if Pat

0:05:32.960 --> 0:05:34.719
<v Speaker 1>can talk to some of the jurors and find out

0:05:34.720 --> 0:05:37.240
<v Speaker 1>what actually happened in the jury room. Thanks for all

0:05:37.279 --> 0:05:40.679
<v Speaker 1>your reporting during this trial. That's Lenan when Bloomberg News

0:05:40.880 --> 0:05:41.760
<v Speaker 1>FX reporter