The US Justice Department is investigating whether an employee of HSBC Holdings Plc leaked confidential client information to a major hedge fund, the Wall Street Journal reported, citing unnamed sources.
The probe is part of a broader criminal investigation into misconduct in foreign exchange markets, according to the newspaper.
The alleged event is said to have occurred in March 2010, when HSBC was helping Prudential Plc sell billions of pounds and buy billions of dollars to finance the British insurer’s planned US$35 billion acquisition of the Asian life-insurance unit of American International Group Inc., the sources said.
A senior HSBC trader allegedly tipped off a trader at the New York-based hedge fund Moore Capital Management LLC about the impending transaction. Although the planned merger was public at the time, the leaked information would have allowed those in the know to profit from related currency trades.
The HSBC trader also allegedly sold large quantities of pounds ahead of Prudential’s order.
Earlier this month, US, British and Swiss regulators imposed a combined US$4.3 billion in penalties against six banks, including HSBC, for failing to stop their staff from improperly sharing confidential information with rival banks and for attempting to boost currencies-trading profits at their customers’ expense.
HSBC and the other five banks didn’t dispute the findings. HSBC said at the time that it “does not tolerate improper conduct”.
The latest probe into HSBC implies that US prosecutors are opening a new front in their investigation into foreign exchange markets, which goes beyond the sharing of market-sensitive information between banks, the report said.
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