The third-largest U.S. bank, Citigroup Global Markets, Inc., was fined $15 million dollars on November 20, 2014 by the Financial Industry Regulatory Authority (FINRA) for failure to supervise communications between their registered representatives and Citigroup Global Markets, Inc. customers.
Specifically, according to the letter of Acceptance, Waiver and Consent (AWC), signed by Citigroup Global Markets, Inc. on August 11, 2014,
- Citigroup Global Markets, Inc. failed to adequately supervise idea dinners;
- Citigroup Global Markets, Inc. failed to prevent the disclosure of nonpublic research information concerning Apple, Inc.;
- Citigroup Global Markets, Inc. failed to adequately enforce its own policies concerning communications by equity research analysts;
- Citigroup Global Markets, Inc. allowed their equity research analysts to participate in investment baking road show presentations, which is directly prohibited by NASD Rule 2711(c)(5) and;
- Citigroup Global Markets, Inc. failed to have written supervisory procedures designed to ensure its equity research analysts did not participate in these road show presentations.
According to a recent article in InvestmentNews, while Citigroup Global Markets, Inc. issued numerous warnings regarding these communications, when Citigroup did find violations, it failed to adequately discipline the staff or did not do so soon enough. According to Cameron Funkhouser, executive vice president of FINRA’s Office of Fraud Detection and Market Intelligence, “Citigroup did not enforce the boundaries of permissible communications to ensure that its analysts did not provide certain clients with improper access to nonpublic research information.”
Citigroup Global Markets, Inc. was fined $15,000,000 as a result of these serious FINRA violations and was ordered to submit a written plan to FINRA within 60 days, detailing how Citigroup Global Markets, Inc. will improve these shortcomings. Once FINRA approves the plan, it must be implemented to all Citigroup Global Markets, Inc. offices.
This is not the first time Citigroup Global Markets, Inc. has experienced severe fines as a result of FINRA violations. In fact, in 2003, Citigroup Global Markets, Inc. entered into a settlement of $400 million dollars regarding claims that its analysts were publishing misleading stock research in hopes of winning more investment-banking business. Of the ten other banks that entered into similar settlements, Citigroup Global Markets, Inc. paid the most.
Citigroup Global Markets, Inc. is not alone in their recent woes, however. According to InvestmentNews, “at least seven banks, including JPMorgan Chase & Co. and Goldman Sachs Group, Inc. may be asked to pay a total of $50 million in fines as part of an agreement with FINRA. . . after claims analysts inflated number estimates to win business for their firms. Bank of America Corp, Credit Suisse Group AG, Duetsche Bank AG and Wells Fargo & Co. also may face fines . . .”
If you or someone you know has lost money investing with Citigroup Global Markets, Inc., JPMorgan Chase & Co., Goldman Sachs Group, Inc., Bank of America Corp, Credit Suisse Group AG, Duetsche Bank AG or Wells Fargo & Co., or any of their registered brokers, you may be entitled to compensation for your losses. The law offers investors a path of recovery by way of arbitration through FINRA, however time to file a claim is limited.
Contact the securities fraud attorneys at Fitapelli Kurta today to discuss the merits for your case for free. Our firm prosecutes cases on behalf of investors nationwide on a contingency fee basis as we have extensive experience trying cases before FINRA arbitration panels. Time is of the essence in filing these claims, so do not wait. Call now to speak directly to an attorney.