Stephen Callahan has filed a whistleblower complaint alleging that HSBC engages in frequent front-running and that they fired him for his efforts to stop this illegal behavior. He seeks compensatory and punitive damages, reinstatement, recompense for reasonable attorney’s fees, and an injunction against future front-running.
As detailed in the complaint, prior to working at HSBC, Callahan had been working as a trader for various firms for almost thirty years. In 2021, the then managing director of HSBC, Joseph Leary, allegedly approached the plaintiff about heading up HSBC’s U.S. Rates trading desk. However, after Callahan received his offer but before he accepted it, Leary left HSBC to take a job at a different bank. Callahan asked if he could be a potential replacement for the role, and was told yes.
However, when Callahan started, the company had placed someone else in that position on an interim basis, ostensibly until he passed his licensing exams, for which his licenses had lapsed (his previous positions had not required them).
While working at HSBC he consistently noticed and remarked on instances of front running, the illegal practice of using clients’ purchasing decisions to make trades for the bank’s benefit before making the clients’ trades.
The complaint details that in 2018, HSBC paid more than $100 million in fines to resolve criminal allegations of a wide-reaching front-running scheme. As part of the deal, HSBC agreed to “enhance its compliance program” and,...
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