South Florida Arbitration & Litigation Lawyer Blog
Citigroup Global Markets Inc. – South Florida Broker/Dealer and Account Executive Breach of Fiduciary Duty FINRA Arbitration Attorney
The Financial Industry Regulatory Authority, Inc. (FINRA) is a self-regulatory authority assigned the responsibility, by the Securities and Exchange Commission, to license, regulate and discipline securities broker/dealers and their employees, including account executives. In the event that FINRA elects to institute an enforcement action, firms and licensed individuals have the responsibility to reflect such action on their U-4 and/or U-5 filings, which can be viewed on the FINRA website under the broker-check section of the site or by viewing the monthly disciplinary information also provided on the FINRA site.
The monthly disciplinary information is referenced on the FINRA site generally in alphabetical order. This post relates to the following company or individuals. If the reader would like to review the entire FINRA release or the broker-check information concerning this matter, you can follow these highlighted links:
February 2015 Disciplinary and Other FINRA Actions
Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/
Citigroup Global Markets Inc. (CRD #7059, New York, New York) submitted an AWC in which the firm was censured and fined $3,000,000, to be paid jointly to FINRA and the New York Stock Exchange (NYSE). Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to deliver prospectuses in connection with sales of certain ETFs to customers. The findings stated that the firm failed to deliver prospectuses for approximately 255,000 customer purchases of approximately 160 ETFs during a three-month period for which the firm self-reported the ETF prospectus delivery failure. Consequently, from 2009 through April 2011, it is estimated that the firm may have failed to deliver prospectuses for over 1.5 million purchases of ETFs by its customers. The findings also stated that the firm failed to design and implement an adequate supervisory system to achieve compliance with the securities laws and regulations governing ETF prospectus delivery. The firm’s decentralized supervisory system was not reasonably designed to ensure compliance with its prospectus-delivery requirements, which contributed to the firm’s failure to identify deficiencies in its process, to timely identify the scope of the problem after the firm detected certain failures in 2009, and to timely remedy the inadequacies in its manual process. The firm did not appropriately respond to “red flags” indicating that it had experienced failures to deliver. Although the firm notes isolated ETF prospectus delivery failures in 2009, it did not determine the extent of the issue or fully recognize deficiencies in its supervision in these areas until 2010. (FINRA Case #2011026502901).
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