Matt Levine’s Money Stuff: Citi Traders Didn’t Know the Rules

Citi sales traders

A plausible model of traders at big investment banks might be:

1. They are playing a game of poker with their customers, in which they selectively use and withhold information in order to make the bank more money. (And the customers do the same to them.)
2. Some of the stuff that the traders do would look, to an outsider, “dishonest.” Because it is! They are not in a game of perfect information; they do not have an obligation to tell their customers everything that might be of interest to them. The essential fact of trading is adverse selection ...