Citigroup Probed Over 2022 Fat-Finger Error That Rattled European Stocks

Citigroup Inc. is facing investigations by government and regulatory agencies in the UK and Europe over a fat-finger error that briefly sent European stocks plummeting on May 2, 2022. The mistake, made by a trader working from home, wiped out over $300 billion in value before it was identified and corrected within minutes.

The error sparked a minutes-long selloff in the OMX Stockholm 30 Index, affecting bourses from Paris to Warsaw. Citigroup publicly acknowledged its involvement in the flash crash immediately after it happened and briefed regulators and exchanges about the incident.

Why this matters: The incident highlights the vulnerability of global financial markets to human error, even with advanced automated systems in place. It also underscores the need for stricter regulatory oversight and accountability to prevent such errors from occurring in the future.

The bank revealed the ongoing probes in its quarterly filing, stating, "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 the investigations but has not elaborated on the specifics of the probes or what prompted the disclosure two years later.

The incident highlights the risks of human error in high-stakes trading environments, even as banks increasingly rely on automated systems. It is estimated that the blunder cost Citigroup more than $50 million, a significant sum but a fraction of the bank's overall trading revenue.

Fat-finger errors, named for the way a trader may accidentally press the wrong key on a computer keyboard, have been responsible for a number of dramatic market moves over the years. In 2014, a Japanese trader nearly bought 57% of Toyota's stock in a $617 billion order that was quickly canceled. In 2015, a junior Deutsche Bank employee sent $6 billion to a hedge fund client by mistake.

The 2022 Citigroup incident stands out for itsbroad impacton European markets and the lengthy investigations it has triggered. The error wiped out $300 billion in European stock value, though markets quickly recovered once it was corrected. The ongoing probes, disclosed two years after the fact, underscore the seriousness with which regulators are treating the matter and could lead to penalties or other consequences for Citigroup.

Key Takeaways

• Citigroup faces investigations in UK and Europe over 2022 "fat-finger" error.
• Error caused $300 billion loss in European stocks before correction.
• Incident highlights vulnerability of global markets to human error.
• Citigroup cooperating with probes, but details not disclosed.
• Error estimated to have cost Citigroup over $50 million.