HSBC share price falls as company may face fresh legal action

HSBC Holdings Plc (LON:HSBA), faces the possibility of fresh legal action in the UK and the US, after on Monday admitting failings at its Swiss-based private banking unit that may have allowed some clients to evade taxes. The admission followed reports in news outlets on Sunday, which shed more light on how the Swiss unit allegedly helped wealthy customers conceal millions of dollars of assets from tax authorities.

Reuters today reported that US prosecutors had stepped up their efforts to establish whether the UK bank had helped Americans evade the taxman. Separately, the US Department of Justice is investigating whether HSBC fixed foreign exchange rates.
In relation to those probes, the DoJ could decide to reopen a deferred prosecution agreement (DPA), struck with HSBC in 2012 as part of a $1.9 billion settlement that allowed the bank to avoid criminal charges over money-laundering allegations.

“It is quite possible that the (agreement) may be reopened as a result of the bank’s activities on either or both the tax evasion and foreign exchange manipulation front,” Reuters quoted a US law enforcement official, who spoke on the condition of anonymity.
In its own report yesterday, the Financial Times also said that the DPA could be revisited. The report also revealed that HSBC could face a criminal investigation in the UK. The FT quoted David Gauke, the UK Treasury minister responsible for tax matters, who said that HM Revenue & Customs (HMRC) received the data,detailing thousands of clients of HSBC’s Swiss unit, in 2010 from the French authorities. However, the data was given “under very strict conditions” preventing HMRC from sharing it with other law enforcement agencies.

“Under these restrictions, HMRC has not been able to seek prosecution for other potential offences, such as money laundering,” Gauke said yesterday. “However, the French authorities have today confirmed that they will provide all assistance necessary to allow HMRC to exploit the data to its fullest.”
In today’s trading HSBC shares were down 1.6 percent at 600.90p, as of 11:35 UTC. The company’s stock has fallen 1.3 percent since the start of the year.
According to the Financial Times, as of February 09, 2015, the consensus forecast amongst 45 polled investment analysts covering HSBC has it that investors should hold their position in the company. The same consensus estimate has been maintained since November 26, when the sentiment of investment analysts deteriorated from “outperform”.
As of 13:40 GMT, Tuesday, 10 February, HSBC Holdings plc share price is 601.20p.