Stuart Scott, a former FX trader and supervisor at HSBC, will seek to dismiss the indictment charging him with wire fraud and wire fraud conspiracy. This becomes clear from a motion for hearing filed by Mr Scott’s representatives with the New York Eastern District Court on March 3, 2022.
The document, seen by FX News Group, unveils plans by Mr Scott to seek a dismissal of the indictment against him on two independent grounds.
First, the defendant claims that the indictment fails to charge an offense in that the statutes with which Mr. Scott was charged, wire fraud and wire fraud conspiracy, 18 U.S.C. §§ 1343, 1349, do not have extraterritorial application and, as alleged in the indictment, the domestic applications of the wire communications did not involve a core or essential part of the charged scheme.
Second, according to Scott, the indictment deprives him, as a British national, of due process in that
a foreign citizen acting entirely abroad may not be charged in the United States unless the aim of his conduct is to cause harm inside the United States or to United States citizens or interests.
The indictment alleged that the aim of Stuart Scott and Mark Johnson was to defraud a Scottish company.
According to the indictment, from approximately 2010 to 2016, Johnson, a citizen of the United Kingdom and resident of London and New York, was the head of global FX cash trading at HSBC Bank plc, a subsidiary o f HSBC Holdings plc. Johnson supervised HSBC’s worldwide FX cash trading business.
From approximately 1997 to 2014, Stuart Scott, a citizen of the United Kingdom and resident of London, was an FX trader, and later a supervisor, at HSBC. In or about April 2011, he became HSBC’s head of FX cash trading for Europe, the Middle East and Africa (“EMEA”) in London. Johnson supervised Scott from approximately 2010 to 2014.
The indictment states that, from at least in or about October 2011 and continuing until at least in or about December 2011, the defendants, together with others, participated in a scheme to defraud a Victim Company by:
- Using information provided in confidence to HSBC by the Victim Company (namely, the details ofthe Victim Company FX Transaction) to purchase Sterling in advance o f the transaction, knowing that the transaction would cause the price o f Sterling to increase, thereby generating substantial trading profits for HSBC and the defendants (a scheme that is commonly referred to as “front-running”) in breach ofHSBC’s duty of trust and confidence to the Victim Company;
- Causing the Victim Company FX Transaction to be executed in a manner designed to cause the price o f Sterling to spike (commonly referred to as “ramping”) to the benefit ofHSBC and the defendants, and at the expense of the Victim Company, despite HSBC’s representations to execute the transaction in the best interests of, and to avoid adverse market impact to, the Victim Company; and
- Making, and causing to be made, material misrepresentations and omissions to the Victim Company to further the scheme by, among other things, concealing HSBC’s role in the spike in the price of Sterling.
Both Mark Johnson and Stuart Scott were charged with wire fraud and wire fraud conspiracy.