Currency traders worldwide will be watching today as opening statements begin in the criminal fraud trial of HSBC's former global head of foreign exchange (forex) spot trading, Mark Johnson. In an Expert Analysis published in Law360, Partner Scott Schirick discusses what to expect in this unprecedented case.
"In the first prosecution of its kind, the government seeks
to criminalize 'front-running' in the spot forex market,
conduct which the defense has characterized as 'common
practice' in the industry, and which has long been prohibited
in the securities markets," Schirick wrote.
"Prosecutions or enforcement actions against individual forex
traders are rare, perhaps because the U.S. spot forex market is so
lightly regulated. Strikingly, what regulations do exist do not, in
fact, prohibit the conduct for which Johnson was indicted," he
explained. "The Johnson prosecution in the Eastern District of
New York therefore will test whether the government can turn sharp
dealing and deception in the unregulated institutional spot forex
market into criminal fraud."
To read the full article, including a detailed analysis of the challenges the government will face in this novel prosecution, please click here.
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