The cost of a typing error at Citigroup was severe: $322 billion was wiped out.
A Citigroup employee was responsible for a typing error, a mistake occasionally seen in the crypto world. This error proved costly for the company. Following an investigation that concluded nearly two years later, Citigroup was fined $78 million.
A simple mistake at the London unit of American financial giant Citigroup led to a $78 million fine, with the total damage reaching $128 million. Known in the Western world as a “fat finger error,” this typing mistake resulted in a trader taking a position far larger than intended, causing significant consequences.
Incident During Terra LUNA Crisis
In May 2022, coinciding with the significant collapse in the crypto world due to the Terra LUNA crisis, a Citigroup trader caused a major market disruption in the first minutes of trading in Europe.
$322 Billion Wiped Out
The erroneous trade led to a massive drop in the OMX Stockholm 30 Index (OMXS30), which includes the largest and most traded 30 companies on the Stockholm Stock Exchange. This incident wiped out $322 billion from the index.
$58 Million Mistake Becomes 58 Million Units
According to information from Bloomberg, the trader intended to hedge his company’s position in the MSCI World Index by creating a basket of stocks totaling $58 million. However, he mistakenly entered 58 million in the quantity field, leading to an enormous $444 billion trade.
Control Mechanism Failure
Citigroup had a control mechanism in place for such errors. Although the majority of the erroneous trade was canceled by this system, a portion went through, resulting in a $1.4 billion transaction.
Detection Delay
The UK’s Prudential Regulation Authority (PRA) completed its investigation, revealing that the error was not detected immediately by the automated systems as expected. Instead, the trader himself identified the mistake 15 minutes after the trade began.
Penalty and Losses
As a result of the investigation, Citigroup was fined $78 million. The financial institution lost $50 million on the trade, bringing the total cost of this small mistake to $128 million.
