Ex-client accuses HSBC's 'rotten' traders of using confidential information for gains

HSBC Holdings faced accusations from an ex-client that its "rotten" traders used confidential information to make a profit, at the start of a London trial examining allegations of front running at the bank's foreign exchange desk over 15 years ago.

The bank's currency team deliberately traded ahead of client orders during a period far earlier than HSBC has previously admitted to, currency investment firm ECU Group said.

HSBC dismissed the claims as "incredibly stale".

The trial will consider "a disgraceful period in HSBC's history", Richard Lissack, a lawyer for ECU said on Monday, that serves as a "chronological prequel" to the episode regarding which the bank paid hundreds of millions of dollars to resolve investigations by UK and US authorities.

The accusations come after the bank's former global head of foreign exchange, Mark Johnson, was jailed for using his advance knowledge of a big client order to trade ahead of it.

His deputy Stuart Scott successfully fought extradition to America after British judges ruled that much of the alleged misconduct took place in the UK.

ECU says HSBC manipulated rates between 2004 and 2006 that affected billions of dollars of orders. The trading desk during that time appears to have seen client orders "as an opportunity for enrichment", Mr Lissack said, calling the culture "rotten".

The lender acknowledged it defrauded two clients by front running in 2010 and 2011 and agreed to pay about US$100 million in a deferred prosecution agreement with the US Justice Department.

HSBC has paid at least US$900 million in fines to global regulators over currency rigging.

HSBC said in its own court filing that the claim was time-barred. The suit was a "cynical and opportunistic attempt to resurrect these stale claims", the bank's lawyer Kenneth MacLean said.

An HSBC spokesman referred to the legal filing and declined to comment further. BLOOMBERG