On August 19, 2015, the US Securities and Exchange Commission announced that Citigroup Global Markets Inc. (CGMI) agreed to pay a $15 million penalty in connection with settling charges for failing to enforce policies and procedures to prevent and detect securities transactions that could involve the misuse of material, nonpublic information. Additionally, CGMI agreed that they had failed to implement policies and procedures to prevent and detect principal transactions conducted by an affiliate.
According to the SEC’s order, CGMI violated Section 15(g) of the Securities Exchange Act of 1934 requiring brokers and dealers to establish, maintain and enforce policies and procedures to prevent the misuse of material, nonpublic information. The SEC’s order also found that CGMI violated Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-(7) requiring registered investment advisers to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act and its rules. In additional to paying the penalty, CGMI has agreed to hire a consultant to review and recommend improvements to the firm’s trade surveillance and advisory account order handling and routing.
The press release is available at: http://www.sec.gov/news/pressrelease/2015-171.html.
The SEC order is available at: http://www.sec.gov/litigation/admin/2015/34-75729.pdf.