Citigroup Faced a Fine Due to Unintentionally Investing $189 Billion into European Markets
UK financial regulators, the Financial Conduct Authority (FCA) and the Bank of England's Prudential Regulation Authority (PRA), have imposed hefty fines on Citigroup for an error made by one of its traders. The US bank was hit with a £28 million ($36 million) penalty from the FCA and a £34 million ($43 million) fine from the PRA.
The regulators decided to lower their fines by 30% since Citigroup agreed to settle the case. If they hadn't, the total fine would have reached a staggering £88 million ($112 million).
The Bank of England drew attention to an event in May 2022 when a seasoned trader at Citigroup mistakenly sold $1.4 billion worth of shares on European exchanges.
In a statement, the FCA mentioned that the trader intended to offload stocks worth a mere $58 million, but made a mistake while entering the amount, leading to an order to sell a whopping $444 billion. But Citigroup's own systems stopped $255 billion of those shares from being sold, and the remaining $189 billion were sent out for trading "over the course of the day." Eventually, a total of $1.4 billion worth of shares were sold before the transaction was canceled.
To improve and enhance the security of its trading systems, Citigroup has since taken measures, the central bank declared.
"Firms involved in trading must have proper risk management systems in place. (Citigroup) didn't meet the standard we anticipate in this area, leading to the fine imposed today," said Sam Woods, the deputy governor and chief executive officer of the PRA.
(This story is still unfolding and will be updated).
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Despite the fine, Citigroup continues to explore new business opportunities in investing, focusing on strengthening its risk management systems to prevent such incidents in the future. Due to the error, the bank learned valuable lessons about the importance of thorough checking and double-verification in its investment strategies.
Source: edition.cnn.com
