As the court hearing of Perry Stimpson proceeds, new allegations of currency manipulation at the upper echelons of Citigroup are coming to light.
Stimpson, the first of four forex traders who have filed court cases for unfair dismissal in the wake of the FX fixing scandal, told the East London Employment Tribunal that two senior bankers intentionally manipulated the sterling rate in advance of a big M&A transaction, effectively putting the illicit profits of the bank ahead of the interests of its clients, according to Reuters.
The client M&A deal in question took place in 2010. The deal reportedly had a significant foreign exchange element. Acting on insider information, both Jeff Feig, who was global head of trading at the time, and Anil Prasad, who was head of foreign exchange, are accused of buying up cash and options to push up the value of the sterling, allowing the bank to net a $35 million profit on the M&A transaction.
Prasad and Feig, both of whom resigned in early 2014 before the allegations were made against them, have emphatically denied the charges.
Citigroup’s lawyer Diya Sen Gupta told the court on Thursday: “The allegations were investigated and are not, and were not, substantiated.”
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Above the Law?
However, the episode highlights a potential disparity between how senior staff, many of whom have avoided persecution, and others were treated in the wake of the FX rigging scandal. Indeed, immediately following the eruption of the scandal, a number of big banks began sacking employees on a massive scale.
The episode highlights a potential disparity between how senior staff, many of whom have avoided persecution, and others were treated in the wake of the FX rigging scandal.
Stimpson pointed out that the example of Prasad and Feig highlights how he, alongside others, has been singled out for breaches of the bank’s code when senior staff have not been. As such, he seems intent on exposing that banks have not been thorough in their assessment of the role of their employees in the FX fixing scandal. Indeed, Stimpson said insider discussions in online chat rooms were “endemic” in the industry, and ignored by senior management.
If that is the case, the banks may have more penalties to face in the future, in addition to the already huge fines levelled against them by regulators. Citigroup has already been fined $2.3 billion by U.S. and U.K. regulators, which makes it the second most penalised bank after Barclays.
The bank denies such accusations. Citigroup said all the allegations of misconduct have been forwarded to its compliance department, and that disciplinary action would be taken against any employee should allegations of misconduct be proven true.