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Citi banker used M&A deal to manipulate market, former FX trader tells court

Wednesday, September 9, 2015 - 22:58
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Senior Citigroup investment bankers put the interests of the US bank ahead of clients, trading on insider information ahead of a major M&A deal five years ago, one of its former FX traders told a London court on Wednesday.

[LONDON] Senior Citigroup investment bankers put the interests of the US bank ahead of clients, trading on insider information ahead of a major M&A deal five years ago, one of its former FX traders told a London court on Wednesday.

Perry Stimpson, a former Citigroup foreign exchange trader who is claiming unfair dismissal, said the bank was handling a big M&A 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.

Mr 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.

Mr 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.

Mr Feig declined to comment when contacted by Reuters.

Mr Feig, who was employed by Citigroup in the US and still lives there, resigned in May 2014, before Mr Stimpson made allegations against him.

Citi lawyer Diya Sen Gupta told the court Stimpson's allegation 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.

Mr Stimpson said he was using the example of Feig'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 2014.

Citi has said Mr Stimpson was dismissed for serious breaches of contract, alleging he shared confidential client information with traders at other banks via electronic chatrooms.

Mr Stimpson, a forex trader at Citigroup in London for 25 years, was dismissed last November 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.

Mr Stimpson said Citigroup staff breached confidentiality around some clients, especially central banks. "It was the culture to talk about central bank activity," he said.

He asked Jerome Kemp, Citi's global head of futures who was involved in Mr Stimpson's disciplinary process, whether the rules on client confidentiality "could be bent at the direction of senior management." Mr Kemp said they could not, and denied there were different standards for central bank clients.

"I believe every one of our clients has the right to expect the information they share with us...is protected by confidentiality. There would be no carve out in respect to a central bank or any other client," Mr Kemp said.

REUTERS

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