Judge Lorna Schofield says it was not proper for the plaintiffs to serve interrogatories on HSBC Holdings plc.
There have been some developments regarding a recent discovery dispute in a Forex benchmark rate fixing case targeting some of the world’s biggest banks, such as JPMorgan, Citi, Barclays, UBS and HSBC.
Shortly after it became clear that HSBC Holdings plc objects to all interrogatories served by the plaintiffs in this case, Judge Lorna G. Schofield has issued an order which defends the bank’s stance.
The Judge explains that she granted permission to serve interrogatories on HSBC North America Holdings, Inc. and HSBC Bank USA, N.A. but did not grant permission to serve interrogatories on non-party HSBC Holdings plc. The Judge warns it was not proper for the plaintiffs to serve interrogatories on HSBC Holdings plc, and HSBC Holdings plc is not required to supplement any responses it has provided already to the plaintiffs.
Also, defendants HSBC North America Holdings, Inc. and HSBC USA, N.A. have no obligation to respond to interrogatories on behalf of non-party HSBC Holdings plc.
Let’s recall that, in June this year, the Court allowed the plaintiffs (a putative class of consumers and end-user businesses alleging that they paid inflated foreign currency exchange rates caused by an alleged conspiracy among some of the world’s biggest banks to fix prices of FX benchmark rates) to serve interrogatories on the HSBC defendants regarding HSBC’s deal with the Department of Justice from 2018.
In January 2018, UK-based HSBC Holdings plc (HSBC) entered into a deferred prosecution agreement (DPA) and agreed to pay a $63.1 million criminal penalty and $38.4 million in disgorgement and restitution to resolve charges that it engaged in a scheme to defraud two bank clients through a multi-million dollar scheme commonly referred to as “front-running.”
According to HSBC’s admissions, on two separate occasions in 2010 and 2011, traders on its foreign exchange desk misused confidential information provided to them by clients that hired HSBC to execute multi-billion dollar foreign exchange transactions involving the British Pound Sterling. After executing confidentiality agreements with its clients that required the bank to keep the details of their planned transactions confidential, traders on HSBC’s foreign exchange desk transacted in the Pound Sterling for the traders and HSBC’s own benefit in their HSBC “proprietary” accounts.
HSBC traders then caused the large transactions to be executed in a manner designed to drive the price of the Pound Sterling in a direction that benefited HSBC, and harmed their clients. HSBC also made misrepresentations to one of the clients, Cairn Energy, to conceal the self-serving nature of its actions. In total, HSBC admitted to making profits of approximately $38.4 million on the first transaction in March 2010, and approximately $8 million on the Cairn Energy transaction in December 2011.
HSBC objected and refused to provide responses on the grounds that the 2018 DPA was signed by HSBC Holdings plc – not a defendant in this case. The bank construes the “defendants in the case” to be only HSBC Bank USA, N.A. and HSBC North America Holdings, Inc. that are the named defendants in the complaint. HSBC Holdings plc. (the parent company of the two above) was originally named a defendant but was dismissed for lack of jurisdiction.