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Citigroup trader fired over 5-word message amid forex scandal

May 09 2017 18:49
Patrick Gower, Bloomberg News

London - A five-word message to a rival banker was enough to cost former Citigroup trader David Madaras his job as the bank fought to appease regulators probing the foreign-exchange scandal engulfing the industry.

Citigroup’s Timothy Gately disclosed the message on the first day of Madaras’s employment lawsuit in London on Tuesday. The executive said the April 2011 chat constituted gross misconduct and firing Madaras was the only appropriate sanction.

"he’s a seller/fking a," Madaras told a rival trader who had just disclosed the identity of a client, Gately said in a filing prepared ahead of the hearing. That chatroom message "validated an external trader’s disclosure of a client name," Gately said in the filing.

Madaras is one of five London-based FX currency traders and salespeople to sue Citigroup for wrongful dismissal in the aftermath of the market-manipulation scandal that cost banks about $10bn in fines. At least three other banks were also sued by traders fired amid the fallout.

They’ve had mixed results, often winning unfair dismissal rulings because banks were too hasty to dismiss staff as a result regulatory scrutiny. Judges have been reluctant to award substantial winnings because in most cases they would have been justified in making the firings if the lenders had taken more time to follow proper procedures.

Winnings at London’s employment courts are capped at about £80 000 unless claimants can prove they were victims of discrimination or were punished for disclosing corporate misconduct.

Three chats

Gately, Citigroup’s head of equities for North America, said Madaras had a clean disciplinary record when he was tasked with probing his conduct in three chat sessions on the Bloomberg terminal between 2010 and 2012. Madaras, who was cleared of misconduct in two, will give evidence later this week during the hearing, which is scheduled to last five days.

His former colleagues, including Perry Stimpson and Baris Ozkaptan, have testified that the bank retroactively condemned information sharing that before the scandal had been encouraged and rewarded.

While Madaras’s conduct “had come to the respondent’s attention as a result of heightened regulatory scrutiny, it is in any event my firm opinion that the standards regarding confidentiality were the same at the time of his conduct as they are now, and had I been asked to opine on his conduct at the time, my decision would have been the same," Gately said.

The review of Madaras’s messages came as part of the bank’s own probe into the foreign-exchange scandal, a spokesperson said.

"Citi terminated employees who Citi found to have engaged in misconduct, including David Madaras," a bank spokesperson said. "Individual accountability continues to be important to Citi and for that reason we are defending David Madaras’s case at the employment tribunal."

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