US Justice Department investigating alleged HSBC leak to hedge fund: WSJ

The alleged leak is believed to have taken place in March 2010, when HSBC was advising British insurer Prudential on a major acquisition and was working on a related multibillion-dollar currency transaction. -- PHOTO: AFP
The alleged leak is believed to have taken place in March 2010, when HSBC was advising British insurer Prudential on a major acquisition and was working on a related multibillion-dollar currency transaction. -- PHOTO: AFP

NEW YORK (REUTERS) - The U.S. Justice Department is investigating allegations that an employee of HSBC Holdings leaked confidential client information to a major hedge fund, the Wall Street Journal reported, citing people with knowledge of the matter.

The alleged leak is believed to have taken place in March 2010, when HSBC was advising British insurer Prudential on a major acquisition and was working on a related multibillion-dollar currency transaction, the Journal reported.

HSBC helped Prudential sell billions of pounds and buy billions of dollars to finance the insurer's planned US$35 billion (S$45.6 billion) acquisition of American International Group's Asian life-insurance unit, the Journal said.

A senior HSBC trader allegedly alerted a trader at hedge fund Moore Capital Management, a prominent New York hedge fund founded by investor Louis Bacon, about the impending transaction, the Journal said.

HSBC was not available to comment.

The probe is part of a broader investigation into currency market manipulation involving the British bank, as well as JPMorgan Chase, Citigroup, UBS AG and others.

US, Swiss and British civil authorities have already fined six banks, including HSBC, US$4.3 billion for failing to stop traders from trying to manipulate the largely unregulated US$5-trillion-a-day foreign exchange market.

US prosecutors will travel to London in the coming weeks to interview traders, the latest sign that authorities are closer to filing criminal charges stemming from the long-running probe, Reuters reported on Tuesday.