Mark Johnson Seeks to Have Conviction Overturned
Posted by Colin Lambert. Last updated: July 28, 2023
Former HSBC FX trading head Mark Johnson has petitioned the US Eastern District Court of New York to have his conviction for wire fraud set aside “to achieve justice”. Johnson was found guilty of wire fraud by a jury in 2017 and lost a subsequent appeal and a submission to have his case heard by the US Supreme Court – he served a two-year sentence, including an extended period in a US jail.
The case related to a takeover by Cairn Energy in December 2010 that would involve an FX trade in Cable of some GBP 2.25 billion. HSBC provided different options to Cairn for executing the trade, the company selected using the 3pm London WMR Fix. At the time of the trade, the fixing window was one minute long, so clearly buying that amount of Sterling in 60 seconds was impossible, so HSBC’s traders bought pounds leading up to the Fix, something that is accepted as a normal practice in markets, and continues to this day. Whilst Cairn Energy was not explicitly told that HSBC would buy ahead of the window, HSBC had won the trade via an RFP process and as such, when it was told it was going ahead, its actions would have been in line with the principles of the future FX Global Code (with the exception of that Code recommending client acceptance of the practice).
During the hearings, evidence was presented that Cairn’s treasurer, Robert Scriven, had told colleagues that HSBC would make money out of the trade by buying ahead of the Fix window, although during the trial he said he testified he did not know that and had given no instructions to the the bank as to how to execute the trade. Again, however, it is hard to see how anyone would expect a bank to buy over two billion pounds in a one-minute window.
Between the initial trial and the appeal, the “misappropriation” theory, which effectively argued that HSBC should have bought in one minute, was dropped by the US Department of Justice’s (DoJ) lawyers, and “right to control” was the basis of the government’s case.
Johnson’s latest attempt to clear his name comes after the DoJ, which brought the charges against him and former-HSBC colleague Stuart Scott, dropped its attempts to extradite Scott from the UK. In dropping its attempt, the DoJ observed that a recent Supreme Court ruling that the “right to control” theory was invalid for wire fraud, meant it was unlikely to secure a conviction. A central plank in the DoJ’s case against Johnson was based upon “right to control”.
The latest petition, which notes, again, that the DoJ brought charges against Johnson in spite of the alleged “victim” Cairn Energy never complaining to the authorities about the execution of the FX deal. It also highlights that, just as Johnson was completing service of his sentence, the Supreme Court handed down its decision on “right to control”. That decision “thus eviscerated the entire foundation of the ruling affirming Mr. Johnson’s conviction—but only once it was too late for him to avoid serving his prison sentence”, the petition states.
The petition requests that the Court issue a writ of error coram nobis, vacate his convictions, and order the return of the financial penalties he has paid. He seeks coram nobis relief because he has completed his custodial sentence, and habeas corpus relief is therefore unavailable. Coram nobis effectively seeks to call the court’s attention to facts that would have changed the judgement had they been known at the time of the original decision.
The petition concludes, “A person’s liberty should not turn on an accident of timing, but here that is exactly what has happened to Mr. Johnson. If Ciminelli [the case in which the Supreme Court struck down “right to control”] had been decided while Mr. Johnson’s direct appeal was pending, he would have been entitled – at a minimum – to a new trial, because the jury was permitted to convict him, and may well have convicted him, based upon a legally invalid theory of wire fraud.
“If Ciminelli had been decided while Mr. Johnson’s direct appeal was pending, the Second Circuit would have had to address his claim that the alternative misappropriation theory also failed as a matter of longstanding black letter law,” it continues. “That should have required a reversal with instructions to enter a judgment of acquittal. Instead, the Second Circuit affirmed Mr. Johnson’s conviction under a theory that the Supreme Court subsequently pronounced cannot sustain a wire fraud charge. Thus, Mr. Johnson served a significant term of incarceration and suffered onerous financial penalties for conduct that is not criminal, while his co-defendant, who engaged in the same innocent conduct and was previously charged with the same offenses, never faced trial and never will.
“Fundamental fairness demands that similarly situated defendants be treated similarly… It would be manifestly unjust to let Mr. Johnson’s conviction stand.”