Citi Executive Says Currency Chats Were Proof of Trader’s Misconduct

(Bloomberg) --

Ex-Citigroup Inc. President Jamie Forese said he found it “disturbing” that a former senior currency trader -- who was cleared by a U.S. jury -- didn’t see anything wrong with the instant messages he exchanged with rivals. Those chats cost the bank billions, he said.

Citigroup had lost all confidence in Rohan Ramchandani when he was fired in January 2014 for sharing confidential information with other traders, Forese said Thursday at a London employment tribunal where Ramchandani is seeking to get rehired. The communications were “by far” the worst example he’d seen of the wrongdoing, he said.

A federal jury acquitted Ramchandani of rigging foreign-exchange markets by coordinating trades and manipulating prices. He says he was using chatrooms on the Bloomberg terminal to exchange market color, including information to help them match trades, amid a daily mix of jokes and gossip with traders at JPMorgan Chase & Co. and Barclays Plc.

But at the employment tribunal, Forese -- at the time the second-most senior executive and a one-time contender to succeed Chief Executive Officer Michael Corbat -- doubled down on the bank’s allegations, saying that for Ramchandani to continue to insist that there was no wrongdoing “makes me question his common sense.” He argued that there was little doubt of the meaning of the messages. Ramchandani, he said, was disclosing the price, size and direction of client trades with external traders.

“Those chats have ended up costing Citigroup billions of dollars,” he said. “The failure to recognize that is damning.”

While Citigroup has conceded that it didn’t follow its own dismissal procedures, the bank is contesting the compensation owed to Ramchandani. It says the prospect of reemploying the 39-year-old is a non-starter. In the U.K., an employment judge can order that a member of staff be rehired, which could allow him to seek additional compensation, including back pay. Ramchandani was paid around 2 million pounds ($2.6 million) a year and says he’s owed about 2.5 million pounds in deferred compensation.

“Even if Ramchandani’s statements in the Bloomberg chats were intended to be ‘bluster’ or ‘big talk,’ they leave the strong appearance of impropriety and evidence of disloyalty to Citigroup that was more than sufficient basis for terminating his employment,” Forese, 56, said in a document prepared for the hearing.

Citigroup dismissed Ramchandani as regulators probed whether traders at the world’s largest banks colluded to use instant-message groups to manipulate benchmarks including WM/Reuters rates.

“This was a high-level decision to rid yourself of an individual attracting unwelcome attention,” Ramchandani’s attorney Jacques Algazy said. The trader “was truly and spectacularly collateral damage,” he said.

”Ramchandani says he was made the “proverbial scapegoat” and fired without cause to help gain favor with regulators looking into its own action.

“One cannot claim to be a scapegoat if one has conclusively engaged in misconduct,” Forese said in his filing for the hearing.

“Individual accountability continues to be important to Citi, and for that reason we are disputing Ramchandani’s request for compensation, reinstatement and re-engagement at the employment tribunal,” the bank said in an emailed statement.

On Wednesday, the lender alleged that Ramchandani and the two other traders used code words to avoid detection in their chat.

“When you understand a code is being used, the whole jigsaw falls into place,” said Julian Phipps, who heads the bank’s foreign exchange and local markets compliance team.

Phipps and Algazy clashed over the meaning of the chats.

“You are very keen to interpret these in the most malign way,” the lawyer told Phipps. For every chat under scrutiny to have an “incredibly unlikely interpretation” was unrealistic, Phipps responded.

In an exchange about a chat where the traders themselves refer to the group as a “cartel,” Algazy said: “Even traders are allowed to make jokes, Mr. Phipps, aren’t they?”

To contact the reporter on this story: Jonathan Browning in London at jbrowning9@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Christopher Elser, Ross Larsen

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