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Former HSBC currencies trading chief Mark Johnson had his criminal conviction for wire fraud thrown out on Thursday, after a US appeals court overturned a major courtroom victory for US authorities.
Johnson was convicted in 2017 of defrauding Scottish energy company Cairn over a $3.5bn transaction in 2011 in which HSBC was hired to convert the proceeds of an asset sale from dollars to sterling.
Prosecutors said he directed subordinates to buy sterling for proprietary accounts before the client trades were placed, and then executed them in a manner that benefited their own positions, netting $7.3mn in illicit gains.
His case was the first jury trial to stem from efforts to crack down on manipulation in the $5tn foreign exchange market, in which traders and banks were accused of manipulating rates and front-running client trades. Banks paid around $10bn in fines.
Johnson served two years in prison for wire fraud and conspiracy to commit wire fraud and paid a $300,000 fine. But as he was completing his sentence, the Supreme Court narrowed the federal scope of fraud by invalidating a key legal theory that was used to convict him.
Shortly after, Johnson appealed his conviction. Two previous petitions for review had been unsuccessful.
“We are delighted that justice has finally been achieved for Mark Johnson after a nine-year ordeal. This is a case that never should have been brought,” said Alexandra Shapiro, a lawyer for Johnson.
“Mr Johnson carried out the Cairn transaction consistent with industry practice and in violation of no law or rule, and he looks forward to moving on with his life.”
Johnson has maintained his innocence and various industry bodies have defended his actions.
The forex-rigging scandal over a decade ago followed similar allegations of Libor manipulation by traders at banks around the world.
Tom Hayes, a former UBS trader who became the first person in the world to be found guilty by a jury of Libor-rigging, has asked the UK Supreme Court to overturn his conviction. The court will hand down its decision next week.