Among those cursing the Swiss National Bank under their breath two months ago was Citigroup, which lost $150 million on the whole affair. Turns out, about $25 million of that came from the foreign-exchange account of one Tormar Associates—the “Tor” being former Goldman rate-swaps and sovereign-debt chief John Tormondsen and “Mar” ex-Goldman and Caxton Associates trader Ron Marks. As is customary in these cases, Tor and Mar have a somewhat different read on their contract with Citi than does the bank.
For its part, Citi was Tor and Mar defaulted on their prime-brokerage account when they expressed disinterest in accepting a three-fold increase in their margin requirements as the franc—which they were shorting—soared against everything. Tor and Mar say that Citi is a bunch of babies who should have just left well enough alone and all would have been fine.
Citibank recently sued Tormar Associates for breach of contract, claiming the family office based in Stamford, Ct., owes Citibank $25.2 million after Tormar defaulted on its prime brokerage agreement with the bank, which served as Tormar’s credit intermediary in the foreign exchange markets….
“The actions Citibank took on January 15, 2015 following the Swiss National Bank’s move to suddenly abandon its efforts to hold down the value of the franc were a panicked response to a temporary market dislocation,” Tormar said in a statement. “Had Citibank taken an appropriate approach, as required by our agreements, and worked with us, neither Citibank nor Tormar would have suffered any losses, as the positions quickly and inevitably rebounded in value.”