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.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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