Citi trader made error behind flash crash in Europe stocks

A trader at the U.S. firm made a mistake “inputting a transaction,” Citigroup said late last night, after a knee-jerk selloff in Swedish stocks in five minutes wreaked havoc in bourses from Paris to Warsaw, wiping out 300 billion euros ($315 billion) at one point. The bank said it identified the error “within minutes” and corrected it.

The incident is a reminder of the work to be done as Chief Executive Officer Jane Fraser campaigns to repair the bank’s reputation. Citigroup’s dysfunction was on display two years ago, when employees mistakenly sent almost $1 billion to Revlon Inc. creditors, an error that resulted in a lengthy and embarrassing public court battle to recover the funds.

Citigroup is in talks with regulators and exchanges about Monday’s incident, according to a person familiar with the matter who asked not to be named discussing non-public information.

A spokesman for Nasdaq Stockholm had said the short-lived slump wasn’t a technical glitch on its part.

“Our first priority was to exclude technical issues in our systems, and our second priority was to exclude an external attack on our systems,” said David Augustsson, a spokesman for Nasdaq Stockholm. “It is very clear to us that the cause of this move in the market is a very substantial transaction made by a market participant.”

The OMX Stockholm 30 Index closed 1.9% lower, roughly in line with a drop in European markets. It had slumped as much as 8% in just five minutes before recovering most of the losses shortly after.