Citi Faces Probe After $300B Flash Crash, "Fat-Finger" Error Costs $50M

Key Takeaway

• Citigroup is under investigation by UK and European authorities for a 2022 trading error causing a flash crash, wiping out $300 billion in stock value.
• The "fat-finger" mistake, made by a trader working from home, cost Citigroup over $50 million.
• Despite the swift correction of the error, the incident highlights significant market vulnerabilities and financial risks.

Regulatory Investigations

Two years following an incident that momentarily disrupted European stock markets, Citigroup Inc. has disclosed that it is under investigation by authorities in the UK and Europe. The focus of these investigations is a trading error that occurred on May 2, 2022, involving Citigroup's equity desk. The New York-based financial institution has stated its cooperation with the ongoing investigations and inquiries but has not provided further details on the nature of these probes. A spokesperson for Citigroup declined to offer additional comments on the matter.

Incident Overview

The trading error in question led to a brief but significant selloff in the OMX Stockholm 30 Index, affecting stock markets across Europe from Paris to Warsaw. This event, often referred to as a "flash crash," resulted in the temporary evaporation of over $300 billion in European stock value. Citigroup acknowledged its role in the incident shortly after it occurred, attributing the mistake to a trader who incorrectly inputted a transaction while working from home. The bank has noted that it identified and rectified the error within minutes of its occurrence.

Financial Repercussions

The trading mishap, colloquially known as a "fat-finger" error due to the accidental nature of the input mistake, is estimated to have cost Citigroup more than $50 million. This figure highlights the significant financial impact that such errors can have, not only on the institution directly involved but also on the broader market. The swift identification and correction of the error by Citigroup were crucial in mitigating further financial damage and restoring order to the affected markets.

Management Quotes

• Citigroup Inc. spokesperson:

  "Government and regulatory agencies in the UK and Europe are conducting investigations or making inquiries regarding an equity desk trading error that occurred on May 2, 2022... Citigroup is cooperating with these investigations and inquiries."