Michael P. Regan, Columnist

Citigroup Sheds 'Dumb Money' Headaches

Automated Trading Desk, a high-frequency pioneer, was no longer a fit.

May 16, 2016 at 8:09 PM UTC

Michael P. Regan is the global team leader for cryptocurrencies at Bloomberg as well as a former senior markets editor and former Americas team leader for Bloomberg's Markets Live blog. He has covered Wall Street for Bloomberg News as a columnist and editor since 2007. He previously worked for the Associated Press.

Provide news feedback or report an error

Site feedback:

Take our Survey

This article is for subscribers only.

Citigroup has been selling a lot of assets lately, so it's not too surprising that the bank just unloaded high-frequency trading pioneer Automated Trading Desk to Citadel.

What is surprising, however, is that it took the firm so long to divest itself of a unit that caused many headaches and became more and more of an odd fit in the years since its purchase in 2007, when the $680 million acquisition was heralded with breathless optimism: "Citi intends to leverage its global capabilities and expand ATD's technology and trading expertise to markets around the world which are experiencing similar growth in trading volume and electronic execution."

The first headache? Well, that $680 million didn't quite turn out to really be $680 million. The payday was $102.6 million in cash and the rest in Citigroup shares. This was in June 2007, right before the financial crisis was about to do this to Citigroup's shares:

ATD founder David Whitcomb was not too thrilled to be holding so many shares that were falling so fast, so he led a class-action lawsuit against Citigroup contending the bank concealed toxic assets from shareholders. The bank ended up agreeing to pay $590 million to settle the case.