Citigroup Global Markets to pay $250,000 fine for alleged FINRA rule violations
Citigroup Global Markets Inc (CGMI) has agreed to a censure and a fine of $250,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
From October 2016 through July 2020, CGMI issued approximately 37,000 inaccurate trade confirmations to customers in connection with the firm’s principal trading activity on its alternative trading system (ATS), CitiBLOC ATS.
Specifically, the firm inaccurately reported its execution capacity as agent when, in fact, the firm acted in a principal capacity. Accordingly, CGMI violated Exchange Act Rule IOb-10, promulgated under Exchange Act Section I0(b), Exchange Act Section 17(a), Exchange Act Rule 17a- 3, and FlNRA Rules 2232, 4511, and 2010.
FINRA notes that trade confirmations protect investors who buy or sell securities through broker-dealers by, among other things, alerting them to potential conflicts of interest with their broker- dealers and providing them the means to verify the terms of their transactions.
Exchange Act Rule l0b-l0 requires broker-dealers that effect securities transactions for customers to provide those customers with a confirmation, at or before completion of each transaction, disclosing certain basic terms of the transaction.
Rule IOb-I0(a)(2) requires broker-dealers to disclose whether they are “acting as agent for [the] customer, as agent for some other person, as agent for both such customer and some other person, or as principal for its own account.”
FlNRA Rule 2232(a) requires member firms, at or before the completion o f any transaction in any security effected for or with an account o f a customer, to provide such customer with written confirmation that conforms with the requirements of Exchange Act Rule IOb-10.