Citi reverses course on firing of Japan trader five years on
Ken Ohtaka's dismissal was rescinded after the two sides reached an agreement last month, according to a copy of the settlement seen by Bloomberg News. Ohtaka, Citigroup's ex-Japan agency trading head in Tokyo, rejected a confidentiality clause in the settlement so that he can talk openly about what he describes as a 'global witch hunt in search of scapegoats' that triggered several firings.
The internal probe launched in 2018 by law firm Clifford Chance was 'flawed,' and its outcome felt 'predetermined' in order to pin the blame for questionable practices on a group of Asia equity sales traders, Ohtaka said in a phone interview.
Ohtaka 'suffered great mental distress as a result of being unilaterally fired by the defendant without any disciplinary reason,' according to court filings for his wrongful dismissal lawsuit. Terms of the settlement weren't disclosed.
Citigroup said the bank took appropriate action in line with procedures when personal conduct failed to meet its high standards.
'All Citi investigations are conducted based on facts and evidence, with assistance from independent experts as needed,' a Hong Kong-based spokesperson said in an email. The bank 'has implemented significant remedial measures to strengthen our compliance and internal controls to address this legacy issue, and continues to enhance its processes to reflect best market practices and to meet regulatory expectations.'
Clifford Chance in Hong Kong said the firm doesn't comment on client matters.
Hong Kong Probe
Ohtaka's settlement is the latest chapter in a saga that began when Hong Kong's securities regulator found that traders in Citigroup's Asia markets division had at times misrepresented the bank's own stock positions on trades as client interest for more than a decade. In essence, the regulator concluded, they had indicated there was customer demand to buy and sell specific stocks when it didn't exist.
The Securities and Futures Commission said that the 'pervasive dishonest behaviour' went as far back as 2008. The regulator faulted Citigroup for internal control deficiencies and poor management oversight, and fined it about $45 million.
After the SFC began reviewing the trades, Citigroup launched its own probe, just months after Ohtaka joined the firm in 2018. The review eventually led to Ohtaka's firing in late 2020, following the dismissal of a dozen traders in Hong Kong and Singapore the previous year. In Tokyo, six traders either quit on their own or were given the option to resign to avoid being fired, according to Ohtaka. Four others were disciplined, resulting in bonus cuts, he said.
The bank declined to comment on specific cases.
Ohtaka, 58, was among several former employees who sued the bank over their dismissals. Ian Weir, an ex-sales trader for Asia-Pacific markets based in London, agreed to settle his case before a London tribunal in October. Citi denied in its submissions to the tribunal that Weir was unfairly dismissed. In December, former equity sales trader Cindy Lui won her wrongful dismissal suit before Hong Kong's Labour Tribunal.
During the probe by Hong Kong regulators, Ohtaka said he assured his Japan team that they had fully complied with local financial regulations and internal bank policies, and that the inquiry shouldn't extend to Tokyo.
In the midst of the probe, he was appointed chair of Citigroup Global Markets Japan's execution governance committee. He said he tightened equity-execution rules, including revising several operational protocols to better protect clients and staff. The Hong Kong office rejected some of the measures as too restrictive and growth-stifling, Ohtaka said.
The bank declined to comment on the alleged Hong Kong measures from more than five years ago.
Ohtaka was fired for allegedly misleading clients into thinking there were natural buyers for two stocks. Citigroup alleged he posted a single batch of 87 so-called indications of interest, or IOIs, that were tagged 'order in hand natural,' even though there wasn't a corresponding client order. That's according to the bank's termination letter seen by Bloomberg News. IOIs are preliminary expressions of trading demand from buyers and sellers in certain stocks.
Ohtaka said he never received IOI training, and denied posting and uploading the low-volume batch. The judge in the wrongful dismissal case found it implausible he intentionally misrepresented the orders as real demand. The judge said the IOI post in question didn't violate regulations and the dismissal constituted an abuse of rights.
The court ruled that Ohtaka's employment contract is valid and Citigroup didn't have cause to terminate him. The court ordered the bank to compensate him with salary that he would have earned until the time of the judgment, plus interest.
Citigroup filed an appeal and threatened to fire Ohtaka again if the judge affirmed the lower court's ruling, according to a Nov. 1 letter from the bank seen by Bloomberg News.
While the appeal was stalled, the high court judge in November instructed both sides to attempt to negotiate a settlement and set a Dec. 24 deadline, according to a summary prepared for the court by Ohtaka's lawyer and seen by Bloomberg. Negotiations dragged on until April, partly because Ohtaka refused to accept a confidentiality clause, which is typical in settlements like these. The firing was revoked and both parties agreed to terminate the employment contract, according to the settlement.
Ohtaka offered to take a reduced payout in return for a public apology, according to a court submission by his lawyer. The bank refused, he said. The bank declined to comment beyond its statement.
Ohtaka said he plans to retire from the finance industry and will use the settlement proceeds to help establish a scholarship fund for high-achieving, underprivileged children. –BLOOMBERG
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Express
11 hours ago
- Daily Express
Zara Qairina death probe completed, case to AGC
Published on: Saturday, August 02, 2025 Published on: Sat, Aug 02, 2025 By: The Vibes Text Size: KUALA LUMPUR: Police have completed their investigation into the death of 13-year-old Zara Qairina Mahathir, who was found unconscious in a drain near her school dormitory in Papar, on July 16 and died the next day. Home Minister Datuk Seri Saifuddin Nasution Ismail said the case will be referred to the Attorney-General's Chambers next week, with 60 witnesses interviewed. Zara's mother, through lawyers Hamid Ismail and Shahlan Jufri, denied linking the case to any VIPs and urged the public not to spread unverified claims, warning such actions could hinder investigations. Police found no evidence connecting the incident to political or influential figures. Separately, Saifuddin announced plans to boost the Malaysian Maritime Enforcement Agency's capabilities with two new offshore patrol vessels and the arrival of the ex-USCGC Steadfast in November. * Follow us on our official WhatsApp channel and Telegram for breaking news alerts and key updates! * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
Free Malaysia Today
14 hours ago
- Free Malaysia Today
US end of parcel tax relief threatens eBay, Etsy trade
Duty-free access for low-value parcels from China and Hong Kong ended in May, disrupting ecommerce flows for online retailers like Shein and Temu. (EPA Images pic) NEW YORK : Americans shopping for secondhand, vintage or handmade items on platforms like eBay and Etsy face steep customs duties on international purchases next month, potentially hurting trade on those peer-to-peer sites. In a surprise move late on Wednesday, US President Donald Trump ordered the removal of 'de minimis' duty-free treatment on parcels under US$800 from all countries, starting Aug 29 – bringing forward a change previously set for July 2027. The acceleration follows pressure from groups that argue the exemption facilitates fentanyl smuggling and has led to a flood of cheap products entering the US duty-free, undermining US retailers and manufacturers. Trump ended duty-free access for low-value parcels from China and Hong Kong at the start of May, disrupting ecommerce flows for online retailers like Shein and Temu. After asking for feedback on widening the removal of de minimis, some US businesses had spoken out against the policy. 'These exemptions are a powerful tool that helps small creators, artisans, and makers participate in and navigate cross-border trade,' Etsy's global head of public policy and advocacy Jeffrey Zubricki wrote in a submission to Customs and Border Protection in March. 'Many American Etsy sellers rely on de minimis to import and export products with key trading partners, sustaining their businesses and generating income to support their families.' The majority of Etsy's 5.6 million active sellers and nearly 90 million buyers are in the US. Etsy did not immediately respond to a request for comment on Thursday. eBay also urged the customs agency to reconsider, arguing that de minimis gives American consumers access to 'a global market to find value at lower prices, particularly for used goods and a unique, collectible inventory that is not available domestically'. In a results call on Wednesday, eBay CEO Jamie Iannone flagged the elimination of de minimis outside of China as a potential disruption that may impact revenue. eBay did not immediately respond to a request for comment. Goods shipped through the postal system will face one of two tariffs: either an 'ad valorem duty' equal to the effective tariff rate of the package's country of origin or, for six months, a specific tariff of US$80 to US$200 depending on the country of origin's tariff rate. It is the latest headache for small businesses grappling with hefty import tariffs imposed by Trump, driving up costs, forcing many to hike prices and fuelling concerns that Americans will be paying more for everyday goods. 'The complexity of doing business with the US has gone to levels nobody could have imagined,' said Andrew Wilson, deputy secretary general of the International Chamber of Commerce. He also questioned whether US authorities can handle the tariff collections, potentially leading to delays and backlogs. 'Is border trade equipped to manage the checks and duties collection? If not, what happens with customs backlogs? It's a huge additional burden from next month,' said Wilson.
The Star
18 hours ago
- The Star
This robot uses Japanese tradition and AI for sashimi that lasts longer and is more humane
A Los Angeles-area startup is using artificial intelligence and robotics in an unlikely way: making sashimi and other fish dishes taste better, last longer and more humane. El Segundo, California-based Shinkei Systems wants to bring a traditional Japanese method of handling fish to fine dining in America, using technology to replace the labour-intensive process historically handled by practitioners on board ships. Investors have just bet millions that it will succeed. The company's AI-driven robot – called Poseidon – has been designed to do a traditional form of fish handling called ikejime in Japanese. It is a method of killing fish that enthusiasts say enhances flavour, texture and shelf life. Although fish processed in this way is found in some of the best restaurants in Japan, it hasn't been promoted in the US because it is generally too expensive. Automating the process will make it more readily available to Americans, said Saif Khawaja, the company's chief executive. "My end goal is that you're walking into your local grocery store and can buy fish that lasts three times as long, tastes better and is handled humanely," he said. The company raised US$22mil (RM 94.10mil) in a funding round last month, co-led by Founders Fund and Interlagos, bringing total funding to US$30mil (RM 128.32mil) since its inception. It has four Poseidons working on ships in the Pacific and Atlantic and hopes to have 10 more working in the coming year. The ikejime process involves taking live fish that has just been caught and quickly putting them out of their misery by killing them with a spike through the brain and cutting their gills. This stops the stress hormone and lactic acid buildup that can hurt flavor and texture when fish are left to asphyxiate. Although traditional practitioners sometimes add a step in which the spinal cord is destroyed, Poseidon just does the first steps of the ikejime technique. The method has remained largely artisanal even in Japan, where only some fishermen will make the effort to process batches of fish in this way to sell to specific sushi chefs who are obsessed with having the highest-quality ingredients. Even in Japan, the method "is still too labour-intensive to replicate at a high speed without damaging the fish," Khawaja said, adding that, "It's impractical and unsustainable for fishermen to adopt methods that require significant hands-on work," in the US. Shinkei says it also has a higher calling than just better-tasting fish. Khawaja said one of the motivations for developing the technology was to try to find a kinder, gentler way to kill fish than letting them die gasping for air. During childhood fishing trips with his father in the Red Sea, he remembers it being "very hard to watch" fish suffocating after they were caught. Poseidon is roughly refrigerator-sized and sits on fishing boat decks. — Courtesy Shinkei Systems/TNS While he was in graduate school at the University of Pennsylvania, Khawaja was moved by an essay that argued that fish suffer inhumane deaths because they cannot vocalise pain. He even once considered developing sensors to make fish's pain audible. Shinkei provides Poseidon machines to fishermen, who then sell fish processed through the machines back to Shinkei at a premium. Shinkei in turn sells the fish to restaurants and other retailers under its fish company Seremoni. Poseidon is roughly refrigerator-sized and sits on fishing boat decks. It processes fish within seconds of being caught. The fish is fed through an opening in the machine and into a small vinyl cavity. The machine then uses AI to identify what kind of fish it is and where exactly its brain and gills are. Fish emerge with a hole in the head and incisions near the gills before being placed in an ice slurry for blood drainage. Quickly killing the fish, bleeding it and chilling it without freezing leads to fish that is noticeably better, Khawaja said. "There's going to be a flavour profile difference and there's going to be texture profile difference," he said. The company chose Los Angeles for its headquarters and production because it has the right mix of potential employees as well as customers. It has the mechanical engineering talent as well as a major fishing fleet and lots of high-end restaurants. "The best mechanical engineering talent in the world, in my opinion, is in Southern California," said Seremoni co-founder Reed Ginsberg. The city is also a major health and consumer products hub as well as a trend setter for cutting-edge food fads. Chef Michael Cimarusti, co-owner of the Michelin starred Providence restaurant in Los Angeles, says he tries to buy local ikejime fish when he can because it preserves the quality and color. The fish preserved using ikejime look as if they "were just pulled from the water minutes ago," he said in an interview posted on YouTube by the American Fishing Tackle Co. Shinkei currently processes thousands of pounds weekly across operations in Washington, Central California and Massachusetts, with expansion to Alaska and the Gulf of Mexico planned this year. After feedback from fishermen that the bots took up too much deck space, the company developed "Block 2" robots that have roughly half the footprint while processing fish twice as fast. Currently, black cod and black sea bass processed through Poseidon are sold under Shinkei's brand Seremoni at retailers such as Happier Grocery and served at upscale restaurants including Atomix and Sushi Zo. This summer, the company plans to add salmon and red snapper to its offerings. – Los Angeles Times/Tribune News Service
