Investment bank fined €12 million after stock trading error

A billion-dollar glitch in London stock trading is costing the US investment bank Citi even more. The German financial regulator BaFin imposed a fine of 12.98 million euros on Citi after a trader at the bank caused turmoil in the stock market in May 2022 with a false entry. A BaFin spokesman said on Thursday that this was the highest penalty the authority had ever imposed in the area of ​​consumer protection.

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The London regulators FCA and PRA had already imposed fines totaling 61.6 million pounds (almost 73 million euros) on Citi in the same matter in May.

BaFin considers itself responsible because Frankfurt-based Citigroup Global Markets Europe AG outsourced the monitoring and administration of computer trading to London, where the expensive error occurred. However, it remains responsible for the secure design of the trading system. The system did not recognize the trader’s input error, which triggered a chain reaction.

Mistakes with billion-dollar consequences

According to the financial regulator FCA, the trader had actually only wanted to put a block of shares worth 58 million dollars into the computer system, which was supposed to release the securities onto the market gradually according to an algorithm. However, he mistakenly put shares worth 444 million dollars (around 413 million euros) up for sale. The computer system stopped part of this, but an order for 189 million dollars slipped through.

Before the error was discovered internally, shares worth a total of 1.4 billion dollars were sold across Europe because Citi’s control mechanisms were too slow, the FCA explained. This put pressure on some indices for several minutes.

A Citi spokeswoman said the investigation into the case was now complete: “We immediately took action to strengthen our systems and controls.” The error made by an individual was “identified and corrected within a few minutes.”