Buying frenzy, alleged tip off and a code word.
Bloomberg News reports that a group of HSBC currency traders in London and New York feverishly jumped ahead of a $3.5 billion client order after they were tipped off using the code words "my watch is off," a U.S. prosecutor told a federal judge.
The buying frenzy was launched after Mark Johnson, HSBC’s former global head of foreign exchange who the bank chose to lead the transaction, alerted the traders via phone call that was recorded, the prosecutor said Thursday in Brooklyn, New York. Johnson is on trial for fraud.
After the trial recessed for the day, prosecutor Carol Sipperly told U.S. District Judge Nicholas Garaufis that the government wants the jury to hear the recordings on Friday, in which Johnson can be heard tipping off a trader in Hong Kong, a signal that she said eventually reached others on both sides of the Atlantic. Prosecutors say Johnson and Stuart Scott, the bank’s former head of currency trading in Europe, along with these other traders, bought pounds before the transaction, collectively making the bank $8 million in illicit profit.
Johnson’s lawyer John Wing argued the tapes shouldn’t be aired at the trial because his client used the term "watch" to mean something entirely differently. "‘My watch is off’ is a code designed to tell people keep this confidential, don’t let the salesmen know about it," Wing said.
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