Senior Citigroup bankers put the interests of the US bank ahead of clients, trading on insider information ahead of a major merger and acquisition deal five years ago, one of its former FX traders told a London court on Wednesday.
Former Citigroup foreign exchange trader Perry Stimpson is claiming unfair dismissal and said the bank was handling a big merger and acquisition deal in 2010 and made millions trading foreign exchange ahead of it — a practice called “front running” — in direct contravention of its code of conduct.
Stimpson, who is representing himself at the hearing at an employment tribunal, said the deal had a foreign currency element that was handled by Jeff Feig, who was global head of trading at the time, and Anil Prasad, who was head of foreign exchange.
Stimpson said Citigroup bought cash and options that pushed the sterling rate higher in advance of the transaction, which allowed the bank to net US$35 million profit.
Feig declined to comment when contacted by Reuters.
Prasad’s lawyers, Stephenson Harwood, said: “These allegations are baseless and are emphatically denied.” It said neither it, nor Prasad, would comment further.
DISCIPLINARY ACTION
Citi lawyer Diya Sen Gupta told the court Stimpson’s allegation into wrongdoing by Feig was investigated “on a privileged basis,” meaning she could not disclose the findings.
Citigroup declined to comment further.
In its submission at the start of the hearing Citigroup said allegations of misconduct by others made by Stimpson in his disciplinary proceedings were forwarded to compliance. It said if misconduct was proven against existing employees then disciplinary action was taken.
Feig, who was employed by Citigroup in the US and still lives there, resigned in May last year, and Prasad left the previous month, both before Stimpson made allegations against them.
Stimpson said he was using the example of Feig and Prasad’s activities to ask the bank’s witnesses in court why he was singled out for breaches of the bank’s code when senior staff were not. He said he told the bank about the misconduct and other examples at a disciplinary hearing in June last year.
ENDEMIC CULTURE
Citi has said Stimpson was dismissed for serious breaches of contract, alleging he shared confidential client information with traders at other banks via electronic chatrooms.
Stimpson, a forex trader at Citigroup in London for 25 years, was dismissed in November last year in the wake of an industry scandal that resulted in banks paying more than US$10 billion in fines for failing to stop traders manipulating the FX market.
Stimpson said Citigroup staff breached confidentiality around some clients, especially central banks. “It was the culture to talk about central bank activity,” he said.
Citi has said it had concerns that Stimpson breached client confidentiality on at least 12 occasions in chatroom conversations, but Stimpson said discussion of central bank activity was “endemic” in the industry and the transcripts of those 12 conversations show that two central banks were mentioned 38 times by nine different participants.
The hearing is to last for at least the rest of this week and Stimpson is expected to testify and bring his own witnesses today.
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