HSBC faces a new legal battle over currency manipulation allegations brought by one of its clients and focusing on foreign exchange trades from 11 years ago.
The Financial Times reports that currency trading and investment firm ECU Group has filed an application to the Commercial Court in London requiring HSBC to disclose records relating to three large orders executed in 2006.
Front running allegations
ECU believed at the time of these orders, that HSBC traders were "front running" them for their own profit.
Front running is the illegal trading for personal gain based on advanced knowledge of upcoming orders from your clients – it is a form of insider trading.
Believing it was the victim of foul play ECU complained to the bank and was promised a full internal inquiry.
This inquiry found no wrongdoing and ECU was persuaded to let the matter drop, the FT reports.
The trading firm decided to reopen its complaint, however, after the US Department of Justice charged two of HSBC's foreign exchange traders last year with front running another client's trade.
US authorities accused the two traders of deliberately buying huge amounts of sterling for the bank's own accounts – an action which pushed up the price of the pound ahead of a $3.5bn sterling purchase on behalf of its client Cairn.
ECU has not yet filed a lawsuit. Instead it has filed an application for pre-action disclosure, asking the courts to force HSBC to hand over documents relating to the trades - including any relevant actions from its New York and London proprietary trading desks.
In 2014, HSBC paid a $618m fine to regulators in the US, UK and Switzerland after it was found to be involved in the forex rate-rigging scandal.
Neither HSBC, nor ECU would comment.