Yahoo Finance Trader working from home wiped out €300bn in stocks after adding extra zero
Citigroup could face a $50m (£39.7m) hit after a London-based trader triggered a “flash crash” in European markets while working from home.
The trader, who has been placed on leave, incorrectly added an extra zero to a trade last month while working remotely and caused a knee-jerk sell-off in Swedish stocks, wiping out as much as €300bn in a matter of minutes.
Citi is still calculating the losses from the so-called “fat finger” mistake but the bank is expected to take a hit of at least $50m, Bloomberg reported.
The lender has so far determined that the mistake was the result of human error rather than the fact that the trader was working from home.
However, the revelation is likely to raise questions about banks allowing traders to work remotely and whether the controls and checks in place are adequate.
Citi is still in talks with regulators and exchanges about the incident, which occurred over the May bank holiday weekend.
The error also came as a blow to Citi’s chief executive Jane Fraser, who has been seeking to increase the bank’s revenue from share trading and who has attempted to improve its financial controls. Ms Fraser,a Scot who became the first woman to run a Wall Street bank when she took over in September 2020, has ordered thousands of employees to focus on improving Citi’s risk and controls systems.
A flash crash is an extremely sharp fall in asset prices and is often caused by a trading mistake. In this case, the error caused Sweden’s OMX Stockholm 30 Index to plunge 8pc in just five minutes before recovering most of the losses shortly after.
Other bourses, including those in Denmark, Norway, Germany, Italy and France, also slumped but later recovered.
Citi has a history of gaffes and in 2020 blamed human error on the fact it wired almost $900m to a group of hedge funds instead of an interest payment of less than $8m.
A US judge ruled that the bank could not recover hundreds of millions of dollars sent by mistake in what he called “a banking error of perhaps unprecedented nature and magnitude”.
Citi declined to comment.
