HSBC HoldingsPlc found no breach of conduct in an internal investigation of a$3.5 billion currency trade that has now led to the of one of its employees and theissuance of an arrest warrant for an ex-employee, the Financial Times reported July 21, citing "people briefed onthe internal HSBC probe."

The revelation comes after the U.S. Department of Justice arrestedHSBC's global head of foreign exchange cash trading, Mark Johnson, on suspicionof conspiracy to commit wire fraud. A warrant was issued for Stuart Scott, whoserved until 2014 as head of foreign exchange cash trading for Europe, theMiddle East and Africa.

HSBC reviewed the $3.5 billion trade that triggered thearrests as part of a wider internal exercise that regulators demanded when aforex manipulation scandal emerged in 2013. The FT's sources said no breach of HSBC's code of conduct was foundregarding the trade, which was carried out on behalf of Cairn Energy.

Meanwhile, legal experts told the newspaper that U.K. lawwould deem Johnson's and Scott's alleged manipulation to be illegal, a keydistinction in determining whether the U.K. can extradite Scott to face chargesin the U.S.

Johnson was in the process of relocating to New York to takeup a new role as head of foreign exchange and commodities in the Americas, the FT added.