(Bloomberg) -- An Asia equity sales trader who was fired from Citigroup Inc. in 2019 won an employment suit against the US bank, Hong Kong’s Labour Tribunal ruled on Monday.
Citigroup failed to justify its “summary dismissal” of former employee Cindy Lui, Deputy Presiding Officer Grace Chan said at a court hearing in the city. Summary dismissal, or immediate termination without notice and payment in lieu of notice, typically happens when companies decide that employees have committed gross misconduct.
Lui was among a team of Hong Kong-based traders who were fired more than five years ago, after regulators in the city found long-running problems in how Citigroup’s Asia markets division communicated positions in certain stocks to clients.
Citigroup was fined HK$348.3 million by Hong Kong’s Securities and Futures Commission in 2022 for what the regulator called “pervasive dishonest behavior” when executing stock trades for clients. Between 2008 and 2018, traders at the bank had at times indicated there was real customer demand to trade certain stocks when such orders did not exist, according to the SFC.
The bank’s Asia equity sales traders had mislabeled so-called “indications of interest,” which are preliminary expressions of trading demand from buyers and sellers in certain stocks. When clients responded to the IOIs, Citigroup would often act as a principal and buy or sell stocks from them.
“We are reviewing the Tribunal’s decision and will make further comment in due course,” a spokeswoman for Citigroup said.
Lui had been a vice president at Citigroup in Hong Kong, and worked for the bank for 12 years before she was fired in March 2019. Citigroup had accused her of misrepresenting the nature of trades to a client, making ambiguous statements, and misleading its investigations team. She lost about HK$2 million ($256,000) in accrued pension benefits when she was terminated, as well as her 2018 bonus.
Lui told the city’s labor tribunal that she didn’t deliberately misrepresent trades or client positions, and that the bank had provided erroneous training and limited guidance on how to categorize indications of interest and communicate them to clients.
She also told the tribunal that she was denied opportunities to work at other bulge bracket investment banks after being fired, and had to settle for jobs that paid significantly less than what she previously earned. Lui currently works at Haitong Securities, a Chinese brokerage.
Dismissal Reason
Chan said on Monday that Citigroup had “a valid reason to dismiss” Lui, after she misrepresented the nature of a trading position in shares of Tencent Holdings Ltd. to a client. Chan also said that clearer evidence was required to prove fraud and dishonesty, beyond negligence.
“Summary dismissal is very serious act to take against an employee,” Chan said. “It is the capital punishment in that, if the dismissal is justified, the employee will be deprived of all possessions provided by the employer.” After considering the facts presented, Chan said “there was not enough evidence” to show that Lui deserved to be terminated in this manner.
The tribunal awarded Lui her earned pension benefits and contractual pay due to her if she had been terminated with notice. It denied her claim to be compensated for loss of job opportunities. Neither party was awarded costs.
Back in 2022, the SFC said a “lack of training contributed to the traders’ failure to adhere to the applicable regulatory requirements.” The following year, the Hong Kong regulator banned one of the bank’s senior managers from re-entering the market for 10 years because of the regulatory breaches.
New York-based Citigroup also fired equity sales traders in Singapore, Japan and the UK before the SFC’s decision. Two of them also subsequently filed employment suits against the bank.
Citigroup and a former London-based trader, Ian Weir, settled his case earlier this year, after an employment tribunal judge ruled that Weir had been unfairly and unfairly and wrongfully dismissed in 2021.
In Tokyo, a court ruled in July that Citigroup has to compensate a trader it terminated in 2020 with pay he would have earned under his employment contract until the time of the judgment. Citigroup is appealing that decision, a spokesperson previously told Bloomberg News.
--With assistance from Cathy Chan.
(Updates with more details from Monday’s hearing, and other background.)
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