HSBC Bank USA has agreed to pay $75 to resolve the US Commodity Futures Trading Commission (CFTC) charges related to certain unauthorised trade practices.
The CFTC ordered HSBC to pay a $45m civil penalty for deceptive trading related to swaps with bond issuers, spoofing, and failure in supervision and mobile device recordkeeping.
It has also ordered the bank to cease and desist from further violations under the anti-fraud, anti-manipulation, supervision, and recordkeeping provisions of the Commodity Exchange Act (CEA).
The US agency found HSBC violating CEA in several instances, between March 2012 and July 2020, where its traders engaged in manipulative trading in interest rate swaps and other financial products.
CFTC enforcement director Ian McGinley said: “The Commission has zero tolerance for manipulative, deceptive or spoofing transactions, including by registered swap dealers.
“Registrants need to take their supervisory responsibilities seriously to prevent this conduct.
“Today’s order makes it crystal clear that the CFTC will continue to vigilantly investigate and prosecute disruptions to market integrity and fraud and endeavour to protect all market participants, including swap counterparties, from abusive practices.”
Simultaneously, CFTC ordered HSBC Bank USA, along with HSBC Bank and HSBC Securities (HSBC Affiliates), to pay a $30m fine for failures in record-keeping and supervision.
HSBC Affiliates admitted that they failed to maintain, preserve, or produce records that were required to be kept under CFTC recordkeeping requirements.
They failed to stop their employees, including those at senior levels, from communicating using unapproved methods, including personal text and WhatsApp messages.
CFTC ordered HSBC Affiliates to cease and desist from further violations of recordkeeping and supervision requirements, and to engage in specified remedial undertakings.
Ian McGinley added: “Recordkeeping requirements are critical to the Commission’s oversight of registrants, and when a registrant disregards its obligations, it undermines the Commission’s ability to effectively and efficiently conduct examinations and investigations.
“As this action and previous actions demonstrate, the Commission remains focused on diligently enforcing compliance with recordkeeping, supervision and other regulatory obligations.”
Last week, US regulators fined Bank of Nova Scotia and HSBC over violations in recordkeeping, where their employees used personal devices for work communications.
HSBC Securities agreed to pay $15m to settle US Securities and Exchange Commission (SEC) charges, while Scotia Capital agreed to pay a total of $22.5m to settle CFTC and SEC charges.
