Citigroup Global Markets Inc. and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) over allegations that it omitted required disclosures in equity research reports. As part of the AWC, Citigroup Global Markets Inc. agreed to pay a $475,000 fine and was censured by FINRA. The firm also agreed to submit a written certification that it completed a review of its supervisory systems and written procedures related to disclosures in research reports and certify that the firm’s supervisory systems and written procedures are reasonably designed to achieve compliance with applicable FINRA rules, securities laws, and regulations.
Citigroup Global Markets Inc. is a FINRA member headquartered in New York. It employs nearly 7,000 registered representatives and has 736 branch offices. The firm provides brokerage, securities trading, advisory, investment banking, and other financial services to customers.
If you have lost money with Citigroup Global Markets Inc., contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.
The AWC, which was signed on November 10, 2020, involves Citigroup Global Markets Inc.’s supervisory procedures between November 2012 to November 2017. Specifically, that:
- Citigroup Global Markets Inc. omitted nearly 24,800 required disclosures in 16,850 equity research reports that it was either a manager or co-manager of a public offering of equities for the companies that were covered in the reports.
- The omissions constituted nearly 6.75% of required manager/co-manager disclosures during the 2012-2017 period and affected approximately 4.43% of published equity research reports.
- The omissions resulted in part from Citigroup Global Markets Inc.’s failure to establish and maintain a supervisory system and written supervisory procedures reasonably designed to achieve compliance with applicable FINRA rules, securities laws, and regulations.
Citigroup Global Markets Inc. has previously been fined for similar conduct to that outlined in the latest AWC. The firm paid a $350,000 fine in 2006 and a $725,000 penalty in 2012 for failing to make various disclosures in certain published research reports, failing to establish and maintaining a supervisory system reasonably designed to detect and prevent violations, and failing to comply with various research rating disclosure requirements.
Under FINRA Rule 2241, members are required to identify and manage research-related conflicts of interest. The rule further calls for disclosure of investment banking and underwriting relationships between firms and covered issuers. The required disclosure must be made at the time of publication or distribution of the report.
Omissions often arise in the context of conflicts of interest if a firm is wearing “multiple hats” as broker-dealer and underwriter. A firm must provide all material information to an investor in connection with the purchase, sale, or recommendation to hold a security. The failure to provide all material information to a customer in connection with any of these transactions constitutes an omission. A brokerage firm or financial advisor may be held liable if material facts were omitted and, as a result, an investor lost money.
Brokerage firms are also required to establish and maintain reasonably designed supervisory systems and written procedures to ensure compliance with securities laws and industry regulations.
If you have lost money with Citigroup Global Markets Inc., contact New York securities arbitration lawyer Jorge Altamirano of Iorio Altamirano LLP at jorge@ia-law.com or toll-free at (855) 430-4010 for a free and confidential evaluation of your account.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. We pursue FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.