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Citigroup fined $7m after legit transactions mistaken for test data for 15 years

theregister.co.uk

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Re: Citigroup fined $7m after legit transactions mistaken for test data for 15 years

#91

Post by kchoudhu »

eru wrote: post #48
kchoudhu wrote: post #18

Earlier quoted context omitted.

These fines are fundamentally stupid: yes, Citi's IT fucked up, but the fault is with the regulators for having such braindead reporting requirements to begin with. Instead of something sensible like "you trade, you report", the regulators have set up a patchwork of formats, inclusion criteria and target agencies that pretty much ensures that lapses like this occur. Turning Frank-Dodd into workable code is fucking ha…

The banks are sick of this, but just like the grass that doesn't want to be eaten by the cows, they also depend on this complicated regulation to keep our competitors.

I'm not sure complicated reporting is how banks are maintaining margins. They're diverting billions into complying with these requirements, for very little gain.

Re: Citigroup fined $7m after legit transactions mistaken for test data for 15 years

#92

Post by gravypod »

I've never understood how these fines are meant to benefit anyone. If no one is affected, then why is there a fine? Who is this money going to for damages to be repaid?

Also, why are you not allowed to use real data for testing purposes?

Re: Citigroup fined $7m after legit transactions mistaken for test data for 15 years

#93

Post by larrik »

vostok wrote: post #84
kazinator wrote: post #27

Synopsis: SEC sends clear message to tech people in finance: shut the fuck up if you find something, silently fix it, and sweep the remaining crumbs under the rug, or else your company will be fined millions.

Isn't the lesson that you should blow the whistle? You could take home $700k to $2.1 mio, which is not bad for a back office developer. This is a lower bound because I'm sure the fine/reward would have been bigger if they didn't report it themselves.

Where do we see that tidbit?

Re: Citigroup fined $7m after legit transactions mistaken for test data for 15 years

#94

Post by TruthAndDare »

wpietri wrote: post #88
TruthAndDare wrote: post #79

Earlier quoted context omitted.

> which is not generally what one expects from coffee I disagree. I think it's reasonable to expect that coffee and other hot drinks might be all the way up to boiling. > in a temperature range making burns more likely Is there a particular range for burns? Isn't it simply that the hotter it is, the more burns you get?

That sounds linear to me, which is not correct. Injury level is exponential with temperature: http://www.ncbi.nlm.nih.gov/pubmed/18226454 Injury time is logarithmic: http://www.accuratebuilding.com/services/legal/charts/hot_wa...

> That sounds linear to me

What? Absolutely not. I'm just saying that it sounds reasonable to believe that burns increase with temperature, as opposed to being high in a range of temperatures and lower below and above that range. Figure 4 in your first link agrees with this common-sense guess.

Re: Citigroup fined $7m after legit transactions mistaken for test data for 15 years

#95

Post by sseveran »

larrik wrote: post #93
vostok wrote: post #84

Earlier quoted context omitted.

Isn't the lesson that you should blow the whistle? You could take home $700k to $2.1 mio, which is not bad for a back office developer. This is a lower bound because I'm sure the fine/reward would have been bigger if they didn't report it themselves.

Where do we see that tidbit?

SEC Whistleblower Program https://www.sec.gov/whistleblower

Re: Citigroup fined $7m after legit transactions mistaken for test data for 15 years

#96

Post by XorNot »

gravypod wrote: post #92

I've never understood how these fines are meant to benefit anyone. If no one is affected, then why is there a fine? Who is this money going to for damages to be repaid? Also, why are you not allowed to use real data for testing purposes?

Lying to the SEC is a crime. "It was an accident" doesn't really cut it with financial institutions data handling and development practices.

Re: Citigroup fined $7m after legit transactions mistaken for test data for 15 years

#97

Post by zhte415 »

Bromskloss wrote: post #77
simonh wrote: post #60

Earlier quoted context omitted.

Directors of companies have legal responsibilities to provide these reports to the government. So instead of the company getting a fine for making a mistake even though you tried to comply, now you are personally choosing not to fulfil your legal obligations as a director. Smart move.

> Directors of companies have legal responsibilities to provide these reports to the government. What if you don't tell the directors, but just fix the problem you have discovered? Is everyone off the hook then, or does that also amount to breaking the law (in some country)?

Why you're in Operations or Technology in large financial companies, you're confronted with 'could do better' issues all of the time. All of the time. The more issues the greater the legacy of the system you're working on, as in this case, functionality has been altered from the original vanilla system (here, alphanumeric field type replacing a numerical feed type, the the documentation not being updated/references/or probably in an unreferenced document documenting the original system).

Spotting these things is a _fantastic_ way for a VP to get on the fast-track to Director. And it is fantastic, as a Director, to have people on your team actively looking for holes.

Why?

Because Operational Control is a #1 strategic target for all banks. $7million is nothing. At an extremely senior level this is evidence that a culture of transparency and compliance exists in the company, and ammo the next time the SEC or FED express a 'concern'. At a low level it is a Director or VP demonstrating to their boss that they understand the strategic direction, and that under their watch nothing big is going to blow up, nothing $7billion big; something $7million big is nothing, they know their boss knows this and will get a thank you for it being raised.

So you tell the directors. You make a nice PPT and include it in 'initiatives' when a senior visitor comes to visit and gets a de-brief on your department. You make sure it's carefully and clearly explained, so they can explain it to their boss in a nice, pro-active, continuous improvement kind of manner.

A bank which does not operate like this, in the post 2008 era of regulatory punishment for purgery, is an organisation with a very short future.

Source: Work in Operations and Technology in large banks.

Re: Citigroup fined $7m after legit transactions mistaken for test data for 15 years

#98

Post by sseveran »

kchoudhu wrote: post #91
eru wrote: post #48

Earlier quoted context omitted.

The banks are sick of this, but just like the grass that doesn't want to be eaten by the cows, they also depend on this complicated regulation to keep our competitors.

I'm not sure complicated reporting is how banks are maintaining margins. They're diverting billions into complying with these requirements, for very little gain.

And anyone entering their business would have to as well. The large banks are happy to have these regulations in some ways as it makes it hard for midsized banks to grow and compete with them.

Re: Citigroup fined $7m after legit transactions mistaken for test data for 15 years

#99

Post by jonknee »

josu wrote: post #19
jonknee wrote: post #2

They didn't lose anything, they were FINED $7m for submitting incorrect reports. With the number of mergers that they have gone through it's not surprising they have trouble with company wide reporting.

This is the gist of it: "But in 1998, the company started using alphanumeric branch codes as it expanded its business. Among them were the codes 10B, 10C and so on, which the system treated as being within the excluded range, and so their transactions were removed from any reports sent to the SEC."

The original title stated said "Citi lost $7m after legit transactions mistaken for test data". That was what the Register used too, but it's very misleading.

Re: Citigroup fined $7m after legit transactions mistaken for test data for 15 years

#100

Post by ajmurmann »

rtpg wrote: post #40
ubernostrum wrote: post #37

Earlier quoted context omitted.

There is a school of thought that punitive fines should be a proportion of company value/earnings rather than an absolute dollar figure to exact an equal amount of discomfort. In the infamous McDonald's coffee lawsuit, this was actually the motivation behind the initial large damage award. The jury attempted to award punitive damages equal to two days' worth of McDonald's coffee revenue. (obligatory note here for the…

Yeah though even then it was connected to the coffee revenue, right? I feel like this school of thought is also the one that ends up with things like "3 strikes and you're 25-to-life"

Only because the fine is based on your income doesn't mean it has to be draconic. Quite the opposite. They can actually be less draconic than fixed amount fines. If you earn minimum wage a speeding ticket can be a complete disaster. If you are a tech worker you will barely notice the ticket.
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