Former HSBC Holdings Plc currency trader Mark Johnson, the first person to be convicted in a global crackdown of currency rigging, was sentenced to two years in a U.S. prison as a judge turned aside his request for home detention in the U.K.
He was immediately taken to prison.
A federal jury found Johnson, 52, the bank’s former global head of foreign exchange, guilty of nine counts of wire fraud and one count of conspiracy for front-running a $3.5 billion client order in December 2011. He was convicted in October after a monthlong trial in Brooklyn, New York.
U.S. District Judge Nicholas Garaufis said that U.S sentencing guidelines indicated Johnson should face up to nine years in prison. But he gave Johnson a shorter term due to his strong family ties, his work with children and that as a U.K. national, he would be separated from his family.
"A brief prison sentence is necessary, but anything greater is punitive," Garaufis said.
Garaufis rejected a request from Johnson’s lawyers to allow him to surrender after surgery.
Johnson was also fined $300,000.
The case was victory for American prosecutors, as Johnson was the first person to be tried since the global currency-rigging scandal that resulted in the world’s largest banks paying more than $10 billion in penalties. In January, HSBC paid $100 million to resolve a U.S. Justice Department probe into the rigging of currency rates tied to the case.
In an industry with “a culture of cheating,” prosecutors said sending Johnson to an U.S. prison would serve as a deterrent for other traders considering rate-rigging, crimes which the government said are very difficult to prove. Prosecutors had sought a term of at least seven years for Johnson and a fine of $300,000, arguing he participated in a scheme to aggressively trade in a practice known as "ramping."
The bank was hired by Cairn Energy Plc to convert the proceeds of the sale of a subsidiary from dollars into pounds. Johnson and his colleagues promised to "drip feed" the transaction to avoid an unexpected rise in the rate. Cairn was defrauded because it paid a higher price for the U.K. currency, according to testimony from a government expert.