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Units of HSBC Agree to Pay $75 Million to Settle CFTC's Charges

The U.S. Commodity Futures Trading Commission (“CFTC”) has charged HSBC Holdings plc HSBC for manipulative and deceptive trading, and record-keeping failures. Units of the bank have agreed to pay $75 million to settle the charges.

Per the CFTC’s claim, between March 2012 and April 2016, HSBC traders engaged in manipulative and deceptive trading in interest rate swaps and other financial products.

The CFTC also claimed that bank supervisors were aware of the conduct in some cases. In one instance, a senior manager directed the wrongdoing.

However, HSBC has not admitted or denied the charges.

HSBC Bank USA has agreed to pay $45 million, while HSBCA Bank USA, HSBC Bank Plc and HSBC Securities have agreed to pay a civil penalty of $30 million.

The CFTC said that HSBC also failed to stop employees, including senior staff and compliance personnel, from discussing work via personal text and WhatsApp.

HSBC has already been penalized by the Securities and Exchange Commission (“SEC”) for related charges.

On Thursday, the SEC slapped units of The Bank of Nova Scotia BNS and HSBC with civil penalties for widespread record-keeping violations through employees’ use of personal devices and apps for work communications.

BNS and HSBC agreed that they had failed to meet record-keeping requirements for dealers registered with U.S. market regulators.

Hence, HSBC agreed to pay $15 million to settle the charges, whereas BNS agreed to pay $22.5 million.

Recently, regulators in the United States have been targeting registered dealers for the use of personal devices, saying that failure to maintain records can prevent oversight and investigations into potential wrongdoing.

An HSBC spokesperson stated, “In recent years, we have made significant investments in enhancing our compliance procedures and have worked diligently to maintain the highest standards for professional conduct throughout our organization.”

In the past year, shares of HSBC have gained 21.9% compared with the industry’s growth of 5.7%.


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Currently, HSBC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Legal Action on Other Firms

This February, Wells Fargo & Company WFC agreed to pay $300 million to settle a shareholder lawsuit claiming that the bank hid that it had pushed unnecessary insurance on auto loan customers.

The lawsuit stems from one of WFC’s past scandals over sales practices that resulted in government investigations and fines.

In July 2017, WFC disclosed that hundreds of thousands of customers had been unnecessarily charged for “collateral protection insurance,” which covers auto lenders when borrowers are uninsured.

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