One of HSBC’s former top currency traders can be extradited to face fraud charges in New York, a UK court has ruled, only days after his ex-colleague was convicted on forex-rigging charges in the US.
Stuart Scott, 45, of Radlett, Hertfordshire, can be extradited to the US, Westminster magistrates’ court said on Thursday.
The court did not deliberate on whether Mr Scott, who was the bank’s head of currency trading in London, was guilty or not of the 11 wire-fraud charges he faces and which he strongly denies.
Each count carries a maximum 30-year jail sentence, according to US government court documents seen by the Financial Times.
Mr Scott’s lawyer said he would appeal against the decision. If that process is exhausted unsuccessfully, he is likely to face a trial in New York.
His alleged co-conspirator, Mark Johnson, who was HSBC’s head of global cash foreign-exchange trading, was on Monday convicted in a Brooklyn court.
“We believe the US government’s case to be flawed and materially inaccurate and we also believe this has led the court to fall into error,” Mr Scott’s lawyer said in a statement. “We do not believe that the circumstances, if properly analysed, constitute any criminal offence when applying UK law.
“This case is unique in that it is a UK-centric case, and represents a far too aggressive assertion of the US jurisdiction.”
However, Judge Michael Snow ruled that extradition was warranted because of the “seriousness of the allegations and the public interest in honouring this country’s international obligations.”
Johnson’s was the first jury trial to emanate from the forex-rigging scandal, where banks paid around $10bn in fines. HSBC paid $618m to US and UK authorities, but has still to settle with the US Department of Justice.
The allegations against the two ex-HSBC traders are not about alleged collusion to rig forex benchmarks, however. Instead, they are simple front-running accusations. The DoJ alleges that Johnson and Mr Scott — armed with confidential information that one of HSBC’s clients, Cairn Energy, was about to execute a multibillion dollar-to-sterling trade — hatched a scheme to ramp up the price of sterling ahead of the deal.
It made money for HSBC — the US alleges that Mr Scott’s trades alone made $500,000 in profit — but cost Cairn around $8m. The company has separately settled with HSBC for that amount, according to court documents.
The decision by the UK court follows other controversial high-profile hearings that have allowed extradition to the US. Last year, Navinder Singh Sarao — the day trader dubbed the Hound of Hounslow — failed in his bid to fight extradition and was sent to Chicago. He pleaded guilty to spoofing charges and is co-operating with DoJ.
One possible bar to extradition would have been if UK authorities had their own case. However, UK prosecutors who investigated forex-rigging did not scrutinise the HSBC trades. Instead the UK’s Serious Fraud Office looked at alleged collusion between banks but decided in 2016 to drop their case.
Three London-based traders interviewed by the SFO in that probe have been charged by the DoJ. They have chosen not to fight extradition and instead have flown voluntarily to New York to attend pre-trial hearings. Their jury trial for alleged collusion is set for next summer.