Citigroup fined £14m for controversial trade practices

Citigroup fined £14m for controversial trade practices

Financial Services Authority has fined the world’s largest financial firm Citigroup £14 million as a penalty for controversial trade practices in the government bond markets last year. This includes £9.9 million profits along with £4 million fines for failing to control their act in the bond market. FSA had earlier fined Shell Company for similar offences last year.

However, Citigroup is somewhat lucky to escape a tougher punishment as the FSA concluded in their decision that they had not deliberately tried to distort the bond market when the trades took place on August 2. Though, it would damage the reputation of the company in the market. Citigroup also took a major financial beating when it was fined a massive USD 2 billion in Enron Case for helping the executive in creating the fraud.

Citigroup admit that they had a trading strategy nicknamed Dr Evil, which it now believes, should never have been followed. It involved using the MTS electronic trading system to sell a large number of bonds in a limited period of time. Normally, this action took place in an entire day period. Legal analysts say that this action would act as deterrence for the other companies in the field to avoid taking similar steps, as FSA would now be monitoring the market seriously.