Lawyers for HSBC and the U.S. government urge not to reveal Michel Cherkasky’s reports

The case refers to HSBC’s 2012 admission of laundering hundreds of millions of dollars’ worth of drug money for the Colombian and Mexican drug cartels, which came to a close after a deferred prosecution agreement wherein HSBC agreed to put a system in place, which was independently verified by a court appointed monitor, Michel Cherkasky.


In a move aimed at limiting the radius of damage, lawyers from HSBC Holdings Plc and those working for the U.S. government have pleaded a federal appeals court to not release a report by the court-appointed monitor on measures taken by HSBC to improve its money laundering controls.

Last year a Brooklyn federal court judge ordered the release of a report of HSBC Holding’s alleged money laundering activities. When presenting their oral arguments before a three member panel of judges, in the U.S. Court of Appeals for the Second Circuit, lawyers argued that while presenting the initial order the Brooklyn federal judge overstepped his authority.

Lawyers representing HSBC’s mortgage customer moved the court to release the report, in part, since it caters to a “huge public interest in understanding what is happening in this case.”

The report pertains to a case prepared by a court appointed monitor as part of a 2012 deferred prosecution agreement in which HSBC admitted to violating U.S. sanctions laws. HSBC also admitted to failing to stop Mexican and Colombian cartels from laundering hundreds of millions of dollars in drug proceeds through the bank.

HSBC has agreed to not only shell out $1.92 billion as a fine but also be monitored by Michel Cherkasky, a former New York prosecutor, who is now the CEO of Exiger, a compliance company for 5 years.

Government lawyers as well HSBC’s lawyers do not want Cherkasky’s reports to be made public.

The motion to grant access to release one of Cherkasky’s reports was granted last year by U.S. District Judge John Gleeson, however he has since then left the bench.

Jenny Ellickson, a government lawyer, argued that Gleeson had improperly interfered with the prosecutors’ work.

Her argument revolved the logic that releasing the report would make it harder for the government to enforce the deferred prosecution agreement since it would make HSBC less likely to cooperate.

“The importance of the monitor’s confidential sources is critical here,” said Ellickson.

However, Circuit Judge Gerard Lynch, one of the judges on the panel, found fault with that logic and stated that the sources mentioned in Cherkasky’s reports would already have suffered retaliation from HSBC, since it has received Cherkasky’s reports already.

Presenting another point of view was HSBC’s lawyer, Paul Clement, who put forward the notion that releasing the report would not be fair since the original agreement calls for the reports to be confidential.

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