Citigroup slapped with $50 million fine

NYSE Regulation censured and fined Smith Barney $50 million for trading and record-keeping violations.

NYSE Regulation has censured and fined Smith Barney $50 million for trading and record-keeping violations.
The regulatory arm of the New York Stock Exchange said that the unit of Citigroup Global Markets Inc. failed to supervise trading in mutual fund shares and variable annuity mutual fund sub-accounts, failed to prevent illegal market timing by its brokers and did not maintain adequate books and records.
Thirty-five million dollars will be paid in disgorgement, a $10 million penalty will be placed distribution fund to compensate impacted customers who invested in the mutual funds, and $5 million will be paid to the State of New Jersey related to a “separate regulatory matter arising out of the same conduct.”
Between 2000 and 2003 Citigroup Global Markets failed to adequately supervise its branch offices and certain financial consultants who engaged in market timing, including the use of deceptive trading practices to conceal their own identities or the identities of their timing customers, as well as their excessive trading.
During that period, Citigroup financial consultants engaged in 250,000 market timing trades, generating approximately $32.5 million in gross revenues.
In settling the charges, Citigroup neither admitted or denied any guilt.