Failing to disclose registered reps’ unsatisfied tax liens, judgments and wage garnishment cost New York-based Citicorp Global Markets $375,000 in fines and a censure from the Financial Industry Regulatory Authority, according to a Finra notice published today.
Finra charged Citigroup, the New-York based broker-dealer with 25,000 employees, with failure to update disclosures for 43 registered representatives who had 52 unsatisfied tax liens and judgments between January 1, 2016 through August 31, 2021, the regulator reported on Citigroup’s BrokerCheck report.
The firm also failed “to establish and maintain a supervisory system and written supervisory procedures, such as updating the U4 statements it is required to file with Finra, in a timely fashion when the firm received a wage garnishment notice” on reps, Finra said. U4s are the uniform applications that firms are required to use to register reps with Finra and update their employment and disciplinary history.
Citigroup settled the charges without admitting or denying Finra’s allegations.
"We were pleased to have the matter resolved," Citigroup spokesperson Danielle Romero-Apsilios said by email.
Finra requires that every reps’ Form U4 be kept current “through supplementary amendments, which must be filed not later than 30 days after learning of the facts or circumstances giving rise to the amendment,” the regulator said.
Citigroup was required to add disclosures of unsatisfied liens and judgments on an ongoing basis, but failed to do so, FInra said.
In total, Citigroup received 192 wage garnishment orders from courts and tax authorities for 122 registered representatives. The firm, however, failed to conduct a sufficient inquiry to determine if the underlying event triggering each garnishment order involved a disclosable event that should have been reported on the registered representative’s Form U4, Finra said.
Fifty-two of the wage garnishment orders received by Citigroup on behalf of 43 registered representatives arose from unsatisfied liens or judgments that should have been reported on the respective representative’s Form U4.
“The firm failed to file the required Form U4 amendments, or filed them late, because although it had a system in place to determine whether the wage garnishment orders arose from a disclosable lien or judgment, the system was not reasonably designed,” Finra said.