Photographer: Simon Dawson/Bloomberg

Citigroup Wins U.K. Lawsuit Over Firing of ‘Good Guy’ FX Trader

Updated on
  • David Madaras was fired in 2014 aftermath of FX scandal
  • He is first of five Citigroup FX traders to lose on all claims

A Citigroup Inc. currencies trader described by the executive that fired him as a "good guy," lost his employment lawsuit against the lender after a judge ruled he’d intentionally flouted the rules by confirming the identity of a client in an electronic chat with a rival.

David Madaras, who spent four years at Citigroup before he was fired in December 2014, appeared to "validate" a rival trader’s disclosure of a client name when he responded "he’s a seller/fking a," in a 2011 chat, bank officials said in court filings. Madaras knew his response was inappropriate along with the rest of the exchange, which revealed the price of the client’s trade, Judge Alison Russell said in a May 26 judgment obtained by Bloomberg News.

"If Madaras had stopped the chat after the seller comment, there would not have been misconduct as it was" his rival that disclosed the client name, Judge Russell said in the ruling. "The misconduct arose in the further information provided by" Madaras once it was clear they both knew that they were discussing the same client, she said.

Madaras is the fifth Citigroup currencies trader to sue the lender after he was fired in the aftermath of the market-manipulation scandal that cost banks about $10 billion in fines. Executives became aware of the 2011 messages on the Bloomberg terminal as they scoured traders’ electronic chats amid regulatory scrutiny. At least three other banks were also sued by staff fired amid the fallout.

Madaras, who had a clean record before he was fired, is the only Citigroup FX trader to lose a case at the tribunal, after Perry Stimpson, Carly McWilliams, Robert Hoodless and Baris Ozkaptan had at least partially successful claims while winning little or no compensation. In those cases, the judge ruled Citigroup was too hasty to dismiss staff as a result of regulatory scrutiny, though the bank would have been justified if it had taken more time to follow proper procedures.

Lawyers for Madaras didn’t immediately respond to a request for comment. The ruling can be appealed.

A spokeswoman for Citigroup said the court had made the "right decision."

"Fostering a culture of ethical behavior has been, and continues to be, a top priority for us,” the spokeswoman said.

London Traders Suing Banks Must Settle for Pride Over Money

Citigroup selected three of Madaras’s chats as part of its probe and cleared him of wrongdoing in two. His undoing was his acknowledgment that he knew his rival’s disclosures violated guidelines, unlike his peers who claimed they were not aware they were breaking any rules when they used code names for clients.

"This was not a case like Mr. Stimpson or Ms. McWilliams where the defense was that the employee did not believe that the information was confidential as by reference to the conduct of their peers they believed it sufficiently ‘anonymized’ to amount to market color," Judge Russell said.

While giving evidence Citigroup’s Timothy Gately, who fired Madaras, said the former trader was a "good guy" and he was "gutted that this one chat out of so many, so long ago, could lead to dismissal," according to the ruling.

— With assistance by Hayley Warren

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