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Regulation

HSBC fined $175 million related to foreign-exchange manipulation

HSBC was fined $175 million by the Federal Reserve Board for failing to detect its foreign-exchange traders' misuse of client information, according to an order from the Fed.

The bank did not detect that its FX traders were passing confidential customer information on their trading positions to competitors to "coordinate FX trading in a manner designed to influence benchmark fixes and market prices generally," the Fed order, issued Sept. 29, said.

Between 2008 and 2013, HSBC "lacked adequate governance, risk management, compliance, and audit policies and procedures to ensure that HSBC's covered FX activities complied with safe and sound banking practices and applicable internal policies," according to the order.

The Fed also ordered HSBC to improve its controls and compliance risk management of the firm's FX trading.

An HSBC spokesman could not be immediately reached for comment.

HSBC in November 2014 settled with the Commodity Futures Trading Commission and the U.K. Financial Conduct Authority for manipulating FX benchmark rates during the same time period cited by the Fed. The bank paid $275 million in penalties to the CFTC and $341 million to the FCA.