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UK Authorities Fine Citigroup Over Control Failures
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UK authorities have imposed a fine of £61.6 million ($78.5 million) on Citigroup for failures in its trading operation controls. This is one of the largest fines for systemic breaches.
According to a May 22 announcement by the Prudential Regulation Authority (PRA), issues at Citigroup Global Markets Limited (CGML) “crystallized into trading incidents.”
The PRA and the Financial Conduct Authority (FCA) jointly investigated and penalized Citigroup for failures occurring from April 2018 to May 2022.
Sam Woods, CEO of the PRA and Deputy Governor of the Bank of England for prudential regulation, stated, “Firms engaged in trading activities must have effective controls to manage the risks involved.”
He added that CGML fell short of standards in this area, leading to the substantial fine.
The regulatory probe found that on May 2, 2022, Citi processed an errant order worth $444 billion, which was supposed to be for $58 million, resulting in mistaken sales of $1.4 billion.
The PRA attributed the direct cause of the trading error to a trader’s mistake, but “control deficiencies” allowed the bank’s electronic trading systems to generate erroneous orders.
A Citi spokesperson said the bank had immediately taken steps to strengthen its systems and controls and remained committed to ensuring full compliance with regulations.
The PRA fined Citi £33.9 million for failures in its systems and trading control functions. This amount was reduced by 30% after Citi agreed to settle. The FCA also fined Citi £27.8 million.
Under the leadership of CEO Jane Fraser, Citi is working to address long-standing deficiencies in its risk management, data governance, and internal controls. These shortcomings have led to regulatory notices from the Federal Reserve and the Office of the Comptroller of the Currency.
Khánh Ly
