Had Citigroup put in place compliance personnel, it could have averted the ‘fat finger’ error that resulted in erroneous sell orders worth$1.4 billion on 2 May 2022. The system processed a $444 billion order that was actually supposed to amount to merely $58 million.
Investigations into the costly error have revealed that on that day Citi was facing a shortage of staff. London was observing a bank holiday, and therefore, those in charge of monitoring trade executions using the CitiSmart app were on leave. This work was passed on to the electronic execution desk, which was unable to sniff out the error promptly. Although, the ‘E-trading risk and controls’ (ETRC) team did flag the trade, the electronic execution desk failed to respond promptly. Another e-mail was sent four hours later. That means, precious hours were lost resulting in a huge fine that could have been saved.
The Financial Conduct Authority (FCA) has slapped a fine of almost £28 million ($36 million) on Citigroup. That isn’t all; the Bank of England’s Prudential Regulation Authority (PRA) has imposed a fine of almost £34 million ($43 million).
When Citigroup agreed to go for settlement, the regulators made a 30 per cent concession in the fines. Had it not been for the reduction, Citigroup would have had to cough up about $112 million in fines.
If a compliance officer had been appointed, timely action would have been taken to ensure that real-time monitoring was more effective and prompt escalation of alerts or red flags.
