Citigroup Global Markets/Smith Barney
Citigroup Fined $250,000 for Discovery Violations
The NASD fined Citigroup $250,000 for failing to comply with its discovery obligations in arbitration proceedings from 2002 through 2004. The fines arose from Citigroup’s failure to produce discoverable documents to investor claimants during arbitration proceedings that the investors had filed against Citigroup.
Citigroup Fined $250,000 for Disseminating Faulty Sales Material
The NASD fined Citigroup $250,000 for disseminating faulty sales literature about hedge fund investments. The NASD found that Citigroup provided sales literature about hedge funds that failed to disclose that: the funds were speculative and involved a high degree of risk; investors could lose all of their money invested in the funds; and other specific risks that should have been disclosed.
Citigroup Ordered to Pay $15.2 Million for Improper Sales Materials
The NASD fined Citigroup $3 million and ordered Citigroup to pay $12.2 million in restitution to harmed investors. The fines and restitution were ordered after the NASD determined that Citigroup had failed to adequately supervise brokers who held dozens of seminars for unsophisticated retirees and disseminated improper sales materials. The sales literature failed to make proper risk disclosures, and failed to disclose certain fees, overstated the broker’s credentials and experience.