LONDON, June 8 (Reuters) - British authorities have arrested Stuart Scott, a former senior HSBC executive accused of participating in a fraudulent scheme involving a $3.5 billion currency transaction, according to a U.S. court filing seen by Reuters on Thursday.
Scott was arrested in Britain on Monday following an extradition request by the U.S. Department of Justice, the document filed with the court by acting U.S. Attorney Bridget M. Rohde said.
Scott, HSBC's former head of cash trading for Europe, the Middle East and Africa, was charged in July last year along with Mark Johnson, a British citizen who was HSBC's global head of foreign exchange cash trading and who was arrested in New York.
"Our client strongly denies the allegations. Given there are ongoing proceedings it would be inappropriate to comment further at this time," Anne Davies, a lawyer at Gunnercooke who is representing Scott, said.
HSBC said Scott had left the firm in 2014. "We are unable to comment further on personnel issues or matters which are the subject of ongoing legal proceedings," a spokeswoman for the bank said in an emailed statement.
Scott and Johnson are believed to be the first people to face U.S. criminal charges arising from an investigation of foreign-exchange rigging at banks.
The inquiry led to four banks pleading guilty to conspiring to manipulate currency prices in the United States. HSBC was not among those banks, but in 2014 agreed to pay $618 million to resolve related probes by U.S. and British regulators.
Johnson, a British citizen who at the time of his arrest in 2016 was HSBC's global head of foreign exchange cash trading, has pleaded not guilty to a charge of wire fraud and conspiracy last August.
Prosecutors said Johnson and Scott in 2011 misused information provided by a client that hired HSBC to convert $3.5 billion to British pounds in connection with a planned sale of the client's foreign subsidiaries.
They then used their insider knowledge to trade ahead of the transaction, causing a spike in the price of the currency that hurt HSBC's client, prosecutors said.
London police could not immediately confirm Scott's arrest.
Bloomberg News earlier reported Scott's arrest. (Reporting by Lawrence White in London, additional reporting by Nate Raymond in Boston and Michael Holden and Kirstin Ridley in London; Editing by Adrian Croft)