The U.S. Federal Reserve levied a $175 million fine against HSBC on Friday (Sept. 29) for what it dubbed “unsafe and unsound practices” at the financial institution’s (FI) foreign exchange (FX) trading operations, according to news from Reuters.
The bank is said to have neglected to monitor chat rooms through which foreign exchange traders swap information. The Federal Reserve claims that HSBC dealers exchanged confidential information about their clients via these chat rooms, reportedly coordinating their FX trades to boost profits and manipulate the FX benchmark.
“The board levied the fine for deficiencies in HSBC’s oversight of and internal controls over FX traders,” the Fed said in a statement announcing the fine.
According to reports, more than $4.3 billion worth of fines have been issued against six banks, including HSBC, by the U.S. Commodity Futures Trading Commission (CFTC) and the U.K.’s Financial Conduct Authority (FCA).
“We are pleased to have resolved this matter related to practices in the FX market from 2008-2013,” said HSBC spokesperson Rob Sherman, Reuters reported.
The Federal Reserve is also requiring HSBC to improve its controls over these chat rooms, reports added.
Last year, the Fed fined HSBC $131 million in relation to deficiencies in residential mortgage loan services and foreclosure processing.
In the U.K., the FI is also facing criticism over allegations it suddenly froze the accounts of some of its small business (SMBs) customers as the result of heightened anti-money laundering offers. Late last month, HSBC said it has begun compensating some of the affected SMBs, with unnamed sources telling reporters that there were about 15 small businesses that have been offered compensation.