HSBC Holdings PLC has been slapped with a $175 million fine by the U.S. Federal Reserve over “unsafe and unsound practices” in the company’s foreign exchange trading business.
According to the bank, chat rooms were traders had swapped information about investment positions were not monitored.
The Fed stated, “The board levied the fine for deficiencies in HSBC’s oversight of and internal controls over FX traders.”
HSBC dealers were also accused of sharing information about client orders that was confidential as well as increasing their own profits through coordinated trades.
The Fed stated, “The firm failed to detect and address its traders misusing confidential customer information, as well as using electronic chat rooms to communicate with competitors about their trading positions.
“The board’s order requires HSBC to improve its controls and compliance risk management concerning the firm’s FX trading,” it also said.
Disclaimer: We have no position in HSBC Holdings plc (ADR) (NYSE: HSBC) and have not been compensated for this article.