On Wednesday, May 22, 2024, the United Kingdom Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) announced that they were fining Citigroup Global Markets Limited a combined £61,600,000 (approximately $78 million in USD).
According to the Bank of England, the PRA fined Citigroup almost £34 million, while the FCA imposed a nearly £28 million fine, following parallel investigations into related matters.
The former fine was imposed because the PRA found failings in the corporation’s trading systems and controls in the period of April 1, 2018 to May 31, 2022.
The catalyst for the investigation was an incident in May of 2022 where an “experienced trader” made a so-called ‘fat finger’-trade, accidentally executing $1.4 billion on European exchanges.
The incident could have been much worse. According to CNN, the unnamed trader made an 'input error,' attempting to sell $444 billion worth of stocks instead of the intended $58 million.
Citigroup’s systems blocked $255 billion of the erroneous order, but $189 billion was sent to the trading platform. Ultimately, $1.4 billion worth of stocks were sold before the trades could be canceled.
“Firms involved in trading must have effective controls in place in order to manage the risks involved,” said Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer of the PRA. He elaborated that Citigroup had failed to meet the standards thus resulting in the announced fine.
Ultimately, Citigroup has agreed to resolve the matter and thereby qualified for a 30% reduction in the fine. Without the reduction, the PRA’s financial penalty would have amounted to £48,400,000.
