Citigroup Ousts 8 Traders After Stocks Misconduct Probe
(Bloomberg) -- Citigroup Inc., the global investment bank with a major presence in Asia, has ousted eight equities traders in Hong Kong and suspended three others after a sweeping internal investigation into its dealings with some clients, people familiar with the matter said.
Philip Shaw, a senior equities executive in Hong Kong, and trader Cindy Lui are among those who have left as a result of the review, the people said, declining to be identified as the details are private. Lui declined to comment, while Shaw didn’t respond to calls and messages.
Officials at New York-based Citigroup have been examining whether certain traders properly disclosed the bank’s own financial interest when facilitating stock trades, people familiar with the matter said in January. The scrutiny followed an industry-wide probe last year by the Hong Kong Securities and Futures Commission into whether brokers in the city are providing the best possible prices to their clients when executing trades.
“A review of Hong Kong-based cash equities execution identified personal conduct that did not meet our standards and we have taken appropriate action,” James Griffiths, a Citigroup spokesman said. “Instances where the capacity in which Citi was acting was not accurately represented were detected in relation to facilitation trading.”
Lui, a Citigroup employee since 2007, had already been suspended as a result of the review, the people said in January.
Citigroup has introduced “enhanced regional procedures and controls” to ensure transparency in trading and is “fully compliant with relevant regulations,” Griffiths said in a phone interview. The bank has taken measures to ensure its equities business is fully staffed and has notified clients, he said.
Officials at the U.S. lender focused on whether its traders properly disclosed if the bank was acting as an agent or a principal in executing orders, one of the people said. In an agency trade, a brokerage acts as an intermediary only, receiving a fee for matching buyers and sellers. Principal trading is when a firm buys stocks from a client, taking the position on to its balance sheet, and sells them to another, hoping to gain from the difference.
Citigroup, led by Chief Executive Officer Michael Corbat, generated more revenue than any other global investment bank across the Asia-Pacific region in 2018, according to data from Coalition Development Ltd. Yet while the firm is one of the biggest in the region for fixed-income trading, underwriting and advising clients on deals, its equities business failed to make the top 6, the data show.
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