Citigroup Global Markets Inc. was fined $15 million by Finra for improper communication between its researchers and clients, the Financial Industy Regulatory Authority announced Monday.
Citigroup failed to adequately supervise communications between its equity research analysts, its clients and Citigroup sales and trading staff, Finra says. It also permitted one of its analysts to take part in two ‘road shows’ promoting IPOs to investors.
Citigroup agreed to the fine without admitting or denying the charges.
Finra found that from 2005 to 2014, Citigroup failed to meet its supervisory obligations regarding the potential selective dissemination of non-public research to clients and sales and trading staff. During this period, Citigroup detected violations involving selective dissemination and client communications, but there were lengthy delays before the firm disciplined the research analysts and the disciplinary measures lacked the severity necessary to deter repeat violations, Finra says.
Brad Bennett, Finra executive vice president and chief of enforcement, says, “The frequent interactions between Citigroup analysts and clients at events like ‘idea dinners’ created a heightened risk that views inconsistent with research would selectively be disclosed to clients. Citigroup failed to effectively police these risks.”
In addition, Finra found that in 2011 a Citigroup senior equity research analyst assisted two companies in preparing presentations for investment banking ‘road shows.’