The conviction of former HSBC banker Mark Johnson for defrauding a client in a $3.5bn currency deal shows the importance of banks maintaining ‘vigilance’ over traders, a leading fraud specialist has warned.
Johnson was convicted by a US jury this week of defrauding UK-based oil and gas firm Cairn Energy by front-running the firm in the currency markets.
David Corker, partner at Corker Binning, said: ‘The defence case that the accused’s trading strategy was legitimate risk management designed to help fill the client’s order would have been unassailable but for the contemporaneous recordings and emails.’
Corker said it was usually impossible to differentiate pre-hedging, a legitimate means to reduce risk, from front-running, which harms the client and enriches the bank. However, Johnson ‘revealed his malign intention, to front-run the client order, and so confessed to the crime… on a bank communications network’.
