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