Speaker 1: Federal prosecutors have won a huge victory today as a
Speaker 1: Brooklyn jury convicted former HSBC currency trader Mark Johnson a
Speaker 1: fraud for front running a three point five billion dollar
Speaker 1: client order, forcing the client to pay a higher price.
Speaker 1: HSBC earned eight million dollars on the deal. The prosecution
Speaker 1: strongest evidence was recordings of phone calls between Johnson and
Speaker 1: traders discussing the aftermath of the order. Johnson took the
Speaker 1: stand in his own defense and insisted that he acted properly,
Speaker 1: joining me is Lenan when Bloomberg News FX reporter and
Speaker 1: she has been following this case, Lennon, how long did
Speaker 1: the jury deliberated and what did they ask for during
Speaker 1: the deliberations, Hi June. Well, they asked or they deliberated
Speaker 1: for about two days, um, just under two days, I
Speaker 1: would say, And they asked for tapes that Mark Johnson,
Speaker 1: of Mark Johnson and his colleagues discussing the trades. Um.
Speaker 1: So some of these tapes were the most sort of
Speaker 1: incriminating evidence. We hadn't heard him saying I think we
Speaker 1: got away with it, you know, sort of celebrating and
Speaker 1: swear ring on the tapes, and so I think those
Speaker 1: were pretty damning, and I guess they stuck out in
Speaker 1: the jury's mind. Yeah, and the prosecutors certainly helped them
Speaker 1: emphasize that what would a guilty man be doing saying this?
Speaker 1: So Johnson, as we discussed, took a big chance in
Speaker 1: taking the stand in his own defense. The verdict means
Speaker 1: the jury didn't believe him. Was it the recordings that
Speaker 1: he had the most difficulty with on the stand? I
Speaker 1: think he was actually very calm and collected on the stand,
Speaker 1: But I think you know what the prosecutors said to
Speaker 1: the jury was, look, this is a different guy that
Speaker 1: you're seeing in person versus the person that you hear
Speaker 1: on the tapes. So it's the jury was not convinced
Speaker 1: by his sort of calm, collected demeanor on the stand.
Speaker 1: Did he was he able to explain away any of
Speaker 1: the tapes? There was an explanation for everything, really, his
Speaker 1: his lawyers went point by point through all of the
Speaker 1: most damning evidence. They gave an alternative explanation for pretty
Speaker 1: much everything. So it was very comprehensive, very very long
Speaker 1: testimony by the defendant. How much time does he face
Speaker 1: We're not sure yet, So we're we're watching and waiting
Speaker 1: at the courthouse. Pack her Tato was actually there and so, um,
Speaker 1: you know, he's convicted on almost all of the counts,
Speaker 1: so we'll have to wait and see what the potential
Speaker 1: sentencing is now. The prosecutors are also trying to get
Speaker 1: someone else from HSBC tried in this country. He's in England.
Speaker 1: What's the status of that, So we are still waiting
Speaker 1: to hear the decision on that as well. Stewart Scott,
Speaker 1: who was hurt in many of these tapes in the
Speaker 1: courtroom in the US, is fighting extradition and so he's
Speaker 1: that that's still pending in the UK right now. But
Speaker 1: he was basically Mark Johnson's guy in London handling a
Speaker 1: lot of the trading over there, and so the kind
Speaker 1: of main front line trading was handled by Stewart's gotten
Speaker 1: some of Johnson's colleagues and Johnson sort of blamed him
Speaker 1: at different points for or said that he was really
Speaker 1: the one running at all. Exactly. Well, Johnson was, you know,
Speaker 1: was on a business trip in New York and so
Speaker 1: he said, look, I wasn't looking at the blow by blow,
Speaker 1: I wasn't right in front of my screens. There were
Speaker 1: people in London who were listening to the che atdter
Speaker 1: and and the tone of the trading room, and they
Speaker 1: were the ones who are really managing the frontline stuff.
Speaker 1: So Johnson is the first person to be tried in
Speaker 1: the global currency raking scandal. How important is this conviction
Speaker 1: for federal prosecutors. I think this is a huge landmark,
Speaker 1: both for the prosecutors and for the industry. Many people
Speaker 1: who have spoken to who are too uncomfortable to talk
Speaker 1: on the record, have said, look, we're watching this very closely.
Speaker 1: This is a litmus test if he's the first individual
Speaker 1: to really be held uh, you know, accountable for this
Speaker 1: as a crime for you know, just as an individual
Speaker 1: rather than as a firm. Um, many traders out there
Speaker 1: will be thinking what about me? So Lennon, explain exactly
Speaker 1: what it is that traders are now concerned about. What
Speaker 1: it is they're worried about doing well. First of all,
Speaker 1: they're worried about a huge compliance avalanche that's going to
Speaker 1: come down on them. Um. I think banks right now,
Speaker 1: there there were banks in the courtroom also watching these proceedings,
Speaker 1: So they should be thinking, Okay, what are our practices.
Speaker 1: Let's review all of our practices again. There is a
Speaker 1: code of conduct and foreign exchange that has you know,
Speaker 1: prompted this review, but maybe we need to look at
Speaker 1: it again. Pre hedging is a very very common practice
Speaker 1: in foreign exchange. You get a big order, you need
Speaker 1: to kind of manage your exposure beforehand. How do you
Speaker 1: trade in advance of a client order without typical into
Speaker 1: what Mark Johnson what's convicted of doing, which is front running.
Speaker 1: HSBC wasn't accused of wrongdoing, but the bank has been
Speaker 1: under investigation over currency trading. What's happening in that sphere? Well,
Speaker 1: I think the bank There are multiple legal actions right
Speaker 1: now in foreign exchange, not just with HSBC but also
Speaker 1: with DOEORRGE Bank and other banks UM and the general
Speaker 1: global scene on banking after the the FX scandal is
Speaker 1: that the banks have paid about ten billion dollars all
Speaker 1: in all UM to deal with these kind of rigging allegations.
Speaker 1: So we're going to have to see whether they get
Speaker 1: find more, whether they are worried about additional cases coming
Speaker 1: through UM and whether more individuals are going to be
Speaker 1: put on the stand, and what's the next trial coming up? UM?
Speaker 1: Next trial, I think again Stewart Scott is going to
Speaker 1: be the one to watch here because he's the one
Speaker 1: who was, you know, right in there with Mark Johnson
Speaker 1: on all these tapes, and so if Johnson has been
Speaker 1: found guilty, then uh, you know, perhaps he is the
Speaker 1: next Domino um and then you know, we go from
Speaker 1: there for two days of hearings for extradition, which is
Speaker 1: a lot of time. So we'll be watching. You'll tell
Speaker 1: us what happens, and it'll be really interesting if Pat
Speaker 1: can talk to some of the jurors and find out
Speaker 1: what actually happened in the jury room. Thanks for all
Speaker 1: your reporting during this trial. That's Lenan when Bloomberg News
Speaker 1: FX reporter