The greasy finger trade? Citigroup fined for nearly $189 billion in accidental stock dumping | CNN Business

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UK regulators fined Citigroup a combined £62 million ($79 million) on Wednesday for failures in its trading systems that nearly resulted in $189 billion worth of shares being dumped on European markets.

The Financial Conduct Authority (FCA) fined Citigroup ( C ) nearly £28 million ($36 million), while the Bank of England’s Prudential Regulation Authority fined it almost £34 million ($43 million) after US bank investigations. according to the statements of the authorities.

Regulators reduced their fines by 30% because Citigroup agreed to settle the case. Without this deduction, the combined fine would have exceeded £88 million ($112 million).

“We are pleased to resolve this issue from more than two years ago, which stemmed from an individual error that was identified and corrected within minutes,” a Citigroup spokesperson told CNN. “We have immediately taken steps to strengthen our systems and controls and remain committed to ensuring full regulatory compliance.”

The spokesman declined to comment on reports that the trade was the result of a thumb error, where incorrect data is entered because the wrong key is pressed.

The Bank of England highlighted an incident in May 2022 when one of Citigroup’s “experienced” traders mistakenly sold $1.4 billion worth of shares on European exchanges, causing what brokers described at the time as a “flash crash”.

In its statement, FCA said the unnamed trader had intended to sell just $58 million worth of shares but made an “entry error” which resulted in an order to sell $444 billion.

Citigroup’s systems blocked $255 billion of that, meaning $189 billion was sent to its trading platform sold “during the rest of the day.” In total, $1.4 billion worth of shares were sold before the trader canceled the transaction.

“There was no strong block that would have rejected this large basket of faulty stocks in its entirety and prevented any of them from reaching the market,” the FCA said, adding that the failures risked creating “a market messy”.

The FCA also highlighted the trader’s ability to manually override a pop-up alert without being asked to read all the details it contained, and the bank’s “ineffective” real-time monitoring, which meant alerts escalated too slowly.

Following the incident, Citigroup has taken steps to “improve and strengthen” the security of its trading systems, the central bank said.

“Firms involved in trading must have effective controls in place in order to manage the risks involved. (Citigroup) failed to meet the standards we expect in this area, resulting in today’s fine,” said Sam Woods, chief executive of the Care Regulation Authority.

It’s not the first time Citigroup has been wrong.

In 2020, the bank accidentally sent $900 million in interest payments to the lenders of cosmetics company Revlon – more than 100 times the intended amount. Some lenders returned the money, but others did not. A US district court judge ruled in 2021 that the bank would not be allowed to recover the unpaid $500 million.

Another trading disaster in 2014 – unrelated to Citigroup – rocked the Japanese stock market. An anonymous broker placed and then quickly canceled orders for shares worth more than $600 billion, the BBC reported at the time.

This article has been updated with additional information.