Citi Global Markets fined $300,000
Finra has fined Citigroup Global Markets, the brokerage and securities arm of Citigroup Inc., $300,000 for failing to reasonably supervise the commissions that its brokers charged their clients on stock and options trades.
The Financial Industry Regulatory Authority Inc. has fined Citigroup Global Markets Inc. of New York, the brokerage and securities arm of Citigroup Inc., $300,000 for failing to reasonably supervise the commissions that its brokers charged their clients on stock and options trades.
In March 2006, Washington- and New York-based Finra barred Juan Carlos Hernandez, one of Citigroup’s reps, for charging unreasonable commissions.
As a result of the lack of supervision, during the period from April 2002 to January 2006, Mr. Hernandez charged 27 customers commissions that were substantially in excess of the firm’s calculated rate for appropriate charges, including one instance where he overcharged one customer $1.2 million.
Finra found that prior to October 2007, Citigroup Global Markets did not formally tell brokers about the existence of its calculated commission rates or inform them that the company prohibited brokers from charging commissions that were greater than the rates the firm determined to be reasonable.
Additionally, when commissions exceeded the company’s calculated rates, Citigroup had no policies or procedures to identify and determine whether the commissions were appropriate, based on Finra’s rules regarding the fairness of commissions.
In addition to Mr. Hernandez, two other registered representatives in different branch offices also overcharged commissions, but on a smaller scale, according to Finra.
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