Citigroup Global Markets Fined $800K and Censured by FINRA Over 'Last-Sale' Reports

Soreide Law Group, a Securities Arbitration Law Firm, (888) 760-6552, obtained the following information on FINRA’s website under “Disciplinary and Other FINRA Actions, July, 2013.”

Citigroup Global Markets Inc. (CRD #7059, New York, New York)

was censured, fined $800,000 and ordered to pay $1,055.85, plus interest, in restitution to customers. The firm shall report unreported transactions through the electronic Form T process and pay the fees assessed for these previously unreported transactions. The firm shall provide reports, written and oral, on dates no more than six months, 12 months, and 18 months after the date of acceptance of this AWC regarding the implementation and effectiveness of the firm’s equity trade reporting systems and supervision of equity trade reporting, and provide a summary, written and oral, and any subsequent updates of the results of a review of the new trade reporting system to be performed by the firm’s quality assurance team.

Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it failed to report last-sale reports of transactions in designated securities to the FNTRF; and failed, within the required time period, to transmit last-sale reports of transactions in designated securities to the FNTRF and failed to designate some of them as late. The firm failed to report the correct execution time to the FNTRF in last-sale reports of designated securities transactions and incorrectly designated as “.PRP” to the FNTRF some last-sale reports of designated securities transactions. The firm failed to mark transactions reported to the FNTRF as riskless principal transactions. The findings also stated that the firm incorrectly reported the second leg of riskless principal transactions to the NASD®/NASDAQ Trade Reporting Facility (NNTRF) or the FNTRF. The findings also stated that the firm failed to report last-sale reports of transactions in OTC equity securities to the OTCRF. The firm failed to report trade reports to the OTCRF by 6:30 p.m. Eastern Time (or the end of the reporting session that was in effect at that time) on the trade date. The firm failed to report the correct execution time for reportable securities transactions to the OTCRF. The findings also included that the firm failed to accept or decline trade reports in reportable securities in the FNTRF within 20 minutes after execution, and failed to accept or decline in the OTCRF trade reports in reportable securities within 20 minutes after execution.

Also, FINRA found that the firm erroneously reported transactions in foreign equity securities that were executed and reported in foreign countries to the OTCRF. The firm failed, within 90 seconds after execution, to transmit last-sale reports of transactions in OTC equity securities to the OTCRF. The firm failed to designate to the OTCRF some last-sale reports as late, and failed to report the correct execution time to the OTCRF for some last-sale reports for transactions in OTC equity securities. FINRA also found that the firm failed, within 30 seconds after execution, to transmit to the OTCRF last-sale reports of transactions in OTC equity securities, failed to designate to the OTCRF some last-sale reports as late, and failed to report the correct execution time to the OTCRF for some last-sale reports for transactions in OTC equity securities. Moreover, FINRA found that the firm’s supervisory system did not provide for supervision reasonably designed to achieve compliance with applicable securities laws, regulations and FINRA rules concerning equity trade reporting.

FINRA found that the firm transmitted Execution or Combined Order/ Execution Reports to the Order Audit Trail System (OATSTM) that contained inaccurate, incomplete, or improperly formatted data, so OATS was unable to link the execution reports to the related trade reports in a FINRA trade reporting system. The firm transmitted reports to OATS that failed to include a desk receipt time and failed to show the order receipt time on brokerage order memoranda. The findings also stated that the firm effected transactions in securities while a trading halt was in effect for each of the securities and effected transactions in one security after the securities registration was revoked pursuant to Section 12(j) of the Exchange Act. The findings also included that the firm failed to fully and promptly execute customer market orders, and for some of the orders, failed to use reasonable diligence to ascertain the best inter-dealer market for the subject securities so that the resultant prices to its customers would be as favorable as possible under prevailing market conditions.
(FINRA Case #2007010451301)

This ends the information obtained from FINRA’s website.

Soreide Law Group represents clients nationwide before FINRA. If you have sustained investment losses due to your stock broker/financial advisor’s recommendations, call for a free consultation with an attorney on how to potentially recover those losses: 888-760-6552.