By Paul Hinton, Andrew Newman and George Oldfield (December 6, 2017, 3:56 PM EST) -- Mark Johnson's recent conviction for wire fraud highlights the use of criminal prosecution to police trading practices in institutional financial markets. Federal prosecutors secured a conviction of HSBC's former foreign exchange executive by arguing successfully that HSBC had an inferred fiduciary duty to its customer and that Johnson violated it by misappropriating inside information in a large FX trade. At issue was the practice of pre-hedging, or assembling a position to execute later against a very large block order of FX. Pre-hedging or positioning in advance of an anticipated block order has long been a common method of managing liquidity in lightly regulated FX markets....