How Was HSBC Supposed To Know Its Deferred Prosecution Agreement With The DOJ Prohibited Its Employees From Engaging In (Alleged!) Forex Manipulation?

I mean really.
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Remember in 2012, when the U.S. Department of Justice was like "So, HSBC, it looks like you've been palling around with drug cartels, Iran, and other types of characters, we should probably punish you for that" and HSBC was like "Aww man, do you have to?" and the DOJ was like "Yeah, kinda," and HSBC was like "It'd be a lot cooler if you didn't" and the DOJ was like, "You know what? You seem like a nice guy, so how about instead of prosecuting you just sign an agreement promising not to get into anymore trouble and we'll call it a day?" and HSBC was like, "Sounds great!" and the DOJ was like "But, really, you can't get into anymore trouble, you gotta take that part seriously" and HSBC was like "No problem!" Well a couple of guys on the forex desk didn't get that particular memo and now this is happening.

U.S. prosecutors are considering a criminal charge against a unit of HSBC Holdings Plc related to conduct on its foreign-exchange desk, according to two people familiar with the matter, imperiling an earlier deal that let the bank avoid prosecution. The Justice Department has already charged two people who were on the bank’s foreign-exchange desk with improper trading and is asking whether the bank’s internal review of that trading this year should have resulted in disciplinary action, the people said. Prosecutors’ fresh investigation of HSBC brings them closer to a step that has often been threatened but rarely taken -- tearing up a deferred-prosecution agreement if a company fails to walk the road of reform laid out by the Justice Department. HSBC is essentially on probation: It admitted in 2012 that it helped Mexican drug cartels launder money and did business with Iran and other sanctioned nations. To avoid charges, it signed the so-called DPA, which required it to improve its internal controls and submit to an outside monitor.
If the Justice Department determines that the bank broke U.S. law after it entered into the agreement, it could invoke a section of the deal that says HSBC could be held responsible for the conduct it admitted to in 2012. Such a cascade of events could lead to a conviction in the laundering and sanctions case, threatening the bank’s ability to move beyond its legal troubles.

Maybe the DOJ will take pity on the bank and move to a Second Chances or Three Strikes model?

U.S. Considers HSBC Charge That Could Upend 2012 Settlement [Bloomberg]


RBS Trader Whose Instant Messages Clearly Show Him (Allegedly) Engaging In Libor Manipulation Not Going Down Without A Fight

One thing that most people probably agree on is that having their instant messages, e-mails, and phone calls end up court would be cause for at least a little embarrassment. Everyone's thrown in an emoticon they aren't proud of, some of us have used company time to chat with significant others about undergarments, and the vast majority of workers have spent a not insignificant amount of the workday talking shit about their superiors. Of course, the humiliation gets ratcheted up a notch in the case of people who 'haha' (and in extreme circumstances "hahahah') their own jokes* which, just for example, involve habitual Libor manipulation. Tan Chi Min knows what we're talking about: “Nice Libor,” Tan said in an April 2, 2008, instant message with traders including Neil Danziger, who also was fired by RBS, and David Pieri. “Our six-month fixing moved the entire fixing, hahahah.” And while having such an exchange become public would be tremendously awkward for most, you know what's really 'hahaha' about this whole thing is that 1) Tan was the one who wanted people to read the above, which was submitted as part of a 231-page affidavit earlier this month and 2) He's trying to use it as evidence that he didn't deserve to be fired. The conversations among traders at RBS and firms including Deutsche Bank AG illustrate how the risk of abuse was embedded in the process for setting Libor, the benchmark for more than $300 trillion of securities worldwide......Tan, the bank’s former Singapore-based head of delta trading for Asia, [is] suing Britain’s third-biggest lender by assets for wrongful dismissal after being fired last year for allegedly trying to manipulate the London interbank offered rate, or Libor. Tan, who 'allegedly' tried to manipulate the London interbank offered rate, also included this conversations as part of his defense: “What’s the call on Libor,” Jezri Mohideen, then the bank’s head of yen products in Singapore, asked Danziger in an Aug. 21, 2007, chat. “Where would you like it, Libor that is,” Danziger asked, according to a transcript included in Tan’s filings. “Mixed feelings, but mostly I’d like it all lower so the world starts to make a little sense,” another trader responded. “The whole HF world will be kissing you instead of calling me if Libor move lower,” Tan said, referring to hedge funds. “OK, I will move the curve down 1 basis point, maybe more if I can,” Danziger replied. And this: In another conversation on March 27, 2008, Tan called for RBS to raise its Libor submission, saying an earlier lower figure the bank submitted may have cost his team 200,000 pounds. “We need to bump it way up high, highest among all if possible,” Tan said. Tan also asked for a high submission in an Aug. 20, 2007, instant message to Scott Nygaard, global head of RBS’s treasury markets in London. “We want high fix in 3s,” Tan said in the message. “Neil is the one setting the yen Libor in London now and for this week and next.” Also this: “It’s just amazing how Libor fixing can make you that much money or lose if opposite,” Tan said on an Aug. 19, 2007, conversation with traders at other banks, including Deutsche Bank’s Mark Wong. “It’s a cartel now in London.” And this philosophical one, for good measure: “This whole process would make banks pull out of Libor fixing,” Tan said in a May 16, 2011, chat with money markets trader Andrew Smoler. “Question is what is illegal? If making money if bank fix it to suits its own books are illegal... then no point fixing it right? Cuz there will be days when we will def make money fixing it.” The defense rests. RBS Instant Messages Show Libor Rates Skewed for Traders [Bloomberg] *Although actually people who do this probably don't even have the good sense to be ashamed of themselves.