HSBC to face class action over money laundering claims
As bank giant’s shares sink to new low, HSBC to face class action over money laundering claims
thisismoney.co.uk/money/markets/article-8775523/HSBC-face-class-action-money-laundering-claims.html
By Helen Cahill And Adam Luck, Financial Mail On Sunday
Published: 16:50 EDT, 26 September 2020 | Updated: 10:24 EDT, 27 September 2020
Two American law firms have started building class action law suits against HSBC and Standard Chartered following allegations the banking giants failed to crack down on money laundering.
Labaton Sucharow and Schall Law, which both have a track record of pursuing vast legal claims against listed companies, said they have begun investigating the blue chip firms after leaked files caused their share prices to plunge on Monday.
Class action lawsuits allow multiple claims against a single defendant. They are common in America where they have been successfully used against British firms and are increasingly employed on this side of the Atlantic.
The Mail on Sunday revealed in June that HSBC faces a separate £1.3billion class action legal claim for its involvement in a film scheme used for tax avoidance.
A cache of files released last weekend allegedly show HSBC continued to move dirty cash for clients it already suspected of nefarious activity.
The bank raised the alarm over irregular transactions in 2,100 suspicious activity reports (SARs) filed with the US Treasury Department’s Financial Crimes Enforcement Network between 2000 and 2017.
Banks are supposed to stop moving cash or shut down accounts if they have evidence of criminal activity. But the reports claimed HSBC did not take action.
HSBC’s share price plunged to its lowest level since 1995 following the allegations – falling 5.3 per cent on Monday to £2.88.
Standard Chartered shares fell 5.8 per cent on the same day to £3.38.
Labaton Sucharow lawyer David Schwartz said he is investigating the events that led to the document leak, dubbed the FinCen files.
Brian Schall of Schall Law has urged investors to contact his firm if they suffered losses of $100,000 or more as the banks’ share prices fell. A legal source said: ‘There are listing obligations that require the disclosure of material events.
‘It’s about whether the representations made by the banks at the time someone bought their shares were true or not.
‘It doesn’t surprise me at all that firms are considering taking legal action when shareholder value has been reduced by so much in such a short timeframe. That follows a pattern of cases that were brought after the financial crash.’
A spokesman for HSBC said: ‘Starting in 2012, HSBC embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions. During that period, the monitor fulfilled his role of identifying issues and making recommendations for improvement and concluded HSBC became a safer bank each year as a result of the bank’s efforts.’
HSBC’s share price plunged to its lowest level since 1995 following the allegations – falling 5.3 per cent on Monday to £2.88.
Standard Chartered shares fell 5.8 per cent on the same day to £3.38.
Labaton Sucharow lawyer David Schwartz said he is investigating the events that led to the document leak, dubbed the FinCen files.
Brian Schall of Schall Law has urged investors to contact his firm if they suffered losses of $100,000 or more as the banks’ share prices fell. A legal source said: ‘There are listing obligations that require the disclosure of material events.
‘It’s about whether the representations made by the banks at the time someone bought their shares were true or not.
‘It doesn’t surprise me at all that firms are considering taking legal action when shareholder value has been reduced by so much in such a short timeframe. That follows a pattern of cases that were brought after the financial crash.’
A spokesman for HSBC said: ‘Starting in 2012, HSBC embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions. During that period, the monitor fulfilled his role of identifying issues and making recommendations for improvement and concluded HSBC became a safer bank each year as a result of the bank’s efforts.’
Countrywide became a leading mortgage lender by moving away from traditional products into riskier loans. It also employed sub-standard checks on borrowers, with almost no verification of their income – a practice that almost brought down the banking system. Labaton also won $24million from Countrywide’s auditor, KPMG.
In addition it chased Bear Stearns and Deloitte for crisisera failings, landing $295million for shareholders.
Labaton’s ongoing cases include a major class action against Pacific Gas and Electric Company (PG&E), which was widely blamed for two huge wildfires in California. PG&E was the firm which Erin Brockovich took on as depicted in the Hollywood film starring Julia Roberts.
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