Mark Johnson, the former head of HSBC's global foreign exchange cash trading, was convicted on Monday on one count of conspiracy to commit wire fraud and eight counts of wire fraud after a four-week trial in the U.S. District Court for the Eastern District of New York.

Johnson and a co-defendant were charged in July 2016 of defrauding an HSBC client through a multimillion-dollar “front running” scheme, where a party uses confidential information to stake out a position on a security that will allow that person to capitalize on the increased value of that security.

The federal government alleged Johnson used his position at HSBC to do just that. The British bank was selected to execute a confidential FX transaction for one of its client's subsidiary. As part of the sale, some $3.5 billion in proceeds were to be converted to British pounds.

Ahead of the December 2011 transaction, Johnson and traders working for him stocked up on British pounds. The confidential transaction was then executed in a way that drove up the price of the pound. The move generated roughly $7.3 million in profits for the HSBC traders, while defrauding the client out of millions, the government claimed.

Throughout the process, the traders made misrepresentations about their actions to the victimized client. For example, Johnson suggested the transaction proceed at a time of day when the volatility of the currency market made it easier to manipulate the price. However, the client was told the action would benefit their position, when in fact it would only benefit the traders.

When the client became concerned that the price of the pound was rising ahead of their transaction, they were told that a trader with “a Russian name” was driving the price, when in fact it was the traders at HSBC, according to court papers.

“The jury found that former HSBC banker Mark Johnson exploited confidential information provided by a client of the bank to execute trades that were intended to generate millions of dollars in profits for him and the bank at the expense of their client,” Acting U.S. Attorney Bridget Rohde of the Eastern District of New York said in a statement. “This office, together with its law enforcement partners, will continue to vigorously investigate and prosecute those who would so abuse their client relationships and, more generally, undermine public confidence in the operation of the financial markets by engaging in fraudulent schemes.”

Assistant chiefs of the U.S. Department of Justice's fraud section, Carol Sipperly and Brian Young, along with trial attorney Blake Goebel of the fraud section, and Assistant U.S. Attorney Lauren Elbert of the Eastern District of New York, handled the prosecution.

In a statement, Lankler Siffert & Wohl name attorney Frank Wohl, who represented Johnson, said they plan to appeal.

“An innocent man was convicted,” Wohl said.

The case, U.S. v. Johnson, 16-cr-0045, was before U.S. District Judge Nicholas Garaufis. A sentencing date has not been set. Johnson remained free on bail.

Mark Johnson, the former head of HSBC's global foreign exchange cash trading, was convicted on Monday on one count of conspiracy to commit wire fraud and eight counts of wire fraud after a four-week trial in the U.S. District Court for the Eastern District of New York.

Johnson and a co-defendant were charged in July 2016 of defrauding an HSBC client through a multimillion-dollar “front running” scheme, where a party uses confidential information to stake out a position on a security that will allow that person to capitalize on the increased value of that security.

The federal government alleged Johnson used his position at HSBC to do just that. The British bank was selected to execute a confidential FX transaction for one of its client's subsidiary. As part of the sale, some $3.5 billion in proceeds were to be converted to British pounds.

Ahead of the December 2011 transaction, Johnson and traders working for him stocked up on British pounds. The confidential transaction was then executed in a way that drove up the price of the pound. The move generated roughly $7.3 million in profits for the HSBC traders, while defrauding the client out of millions, the government claimed.

Throughout the process, the traders made misrepresentations about their actions to the victimized client. For example, Johnson suggested the transaction proceed at a time of day when the volatility of the currency market made it easier to manipulate the price. However, the client was told the action would benefit their position, when in fact it would only benefit the traders.

When the client became concerned that the price of the pound was rising ahead of their transaction, they were told that a trader with “a Russian name” was driving the price, when in fact it was the traders at HSBC, according to court papers.

“The jury found that former HSBC banker Mark Johnson exploited confidential information provided by a client of the bank to execute trades that were intended to generate millions of dollars in profits for him and the bank at the expense of their client,” Acting U.S. Attorney Bridget Rohde of the Eastern District of New York said in a statement. “This office, together with its law enforcement partners, will continue to vigorously investigate and prosecute those who would so abuse their client relationships and, more generally, undermine public confidence in the operation of the financial markets by engaging in fraudulent schemes.”

Assistant chiefs of the U.S. Department of Justice's fraud section, Carol Sipperly and Brian Young, along with trial attorney Blake Goebel of the fraud section, and Assistant U.S. Attorney Lauren Elbert of the Eastern District of New York, handled the prosecution.

In a statement, Lankler Siffert & Wohl name attorney Frank Wohl, who represented Johnson, said they plan to appeal.

“An innocent man was convicted,” Wohl said.

The case, U.S. v. Johnson, 16-cr-0045, was before U.S. District Judge Nicholas Garaufis. A sentencing date has not been set. Johnson remained free on bail.