A Bloomberg report this morning has revealed that a Tokyo-based Citigroup currency trader who sued the US bank after it dismissed him for allegedly trying to manipulate foreign-exchange rates has settled the case.
The wrongful-dismissal lawsuit was withdrawn on the 2nd November after a court-mediated settlement, according to sources cited by Bloomberg. As part of the settlement, Citigroup was said to have agreed to overturn its decision on the dismissal of the trader, although he will cease to be employed by the firm.
Violated Code of Conduct
Citigroup fired the trader in January 2015 after uncovering electronic chats which took place between 2011 and 2013 between him and a Singapore-based colleague which violated its code of conduct.
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The communications showed “improper” intent to affect the spot foreign-exchange market by making trades before the setting of currency benchmarks that were used for options contracts.
The trader, who originally filed the case in February 2015 argued that he never received warnings from Citigroup when he carried out transactions to defend its positions in options contracts, adding that he was made a scapegoat and that his actions were condoned by his employer.
Former Citigroup traders in London and Singapore who were fired during the global probe into foreign-exchange manipulation have sued the bank in recent months, saying the behaviour that got them fired was commonplace at the firm. This practice has saddled banks globally with around $10 billion worth of fines to date. Citigroup, however, maintains that it fired the traders for breaching its code of conduct.
The US bank is no stranger to scandal. Just last week, Finance Magnates reported that a Citi trader may have been implicated in the British pound’s October ‘flash crash’ in which sterling’s value collapsed against the US dollar from 1.26 to circa 1.14 in around 40 seconds which was said to have been affected by the Asian trading desk of Citi in Tokyo.
An investigation into the matter implicated the Japanese trading operations of Citigroup for sending repeated sell orders to the market and although the desk is not believed to have started the slide, it is alleged to have “played a key role”.