A manual error by a Citigroup designated trading representative (DTR) has resulted in the company paying a $30,000 fine to the Australian Securities and Investments Commission (ASIC) for contravening market integrity rules.
ASIC found Citigroup had breached market integrity rule 5.9.1 as contained in the Corporations Act 2001 and distorted the "fair and orderly" market value for the ordinary shares of Fantastic Holdings Limited (FAN) in May last year.
A Citigroup DTR was found to have entered a priority crossing to sell 119,231 ordinary shares of FAN at a price of $0.024 instead of $2.42.
The erroneously priced order transacted with the 20,732 FAN Citigroup had been requested to sell by another client at prices between $1.71 and $2.32.
Citigroup executed a crossing of the residual 98,499 FAN at $0.024 and as a result of the transaction, the price of FAN fell from $2.42 to $0.024, representing a decrease of 99 per cent.
Although the error was found to be an accident on behalf of the operator, ASIC said the DTR had failed to enter the order with the appropriate care.
The DTR had moved to a new seat in the dealing room and was using a computer that lacked the appropriate pre-set limits and warnings of their previous computer which would have triggered an alert when the order was made.
Citigroup, upon realising the error, conceded it had erroneously entered the market and contacted ASX Market Control within 80 seconds to alert the counterparties on the buy side to cancel the trades.
ASIC said Citigroup's promptness allowed resolution of the error and the resumption of normal trading in FAN. Citigroup was found not to have derived any benefit from the transaction.
