FINRA fines Citi for reporting deficiencies
Citigroup Capital Markets has agreed to pay a fine of $100,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
For each calendar quarter from the third quarter of 2012 through the second quarter of 2018, the firm made publicly available reports on its routing of non-directed orders in NMS securities that were inaccurate. Specifically, based upon inaccurate information received from a vendor, these 24 quarterly reports over-reported the percentage of:
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non-directed customer orders and
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non-directed customer orders that had been routed to the firm’s CitiCross Alternative Trading System.
Additionally, for at least the first and second quarters of 2018, the firm’s Rule 606 reports failed to include all o f the venues requiring disclosure under Rule 606(a)(l)(ii).
Therefore, Respondent violated Rule 606 and FINRA Rule 2010.
From the third quarter of 2012 to October 2021, the firm failed to establish and maintain a supervisory system and written supervisory procedures reasonably designed to achieve compliance with Rule 606. The firm relied on a third-party vendor to supply the data for Rule 606 reporting. The firm’s procedures required a designated person to review the data to “ensure that the percentages and underlying order counts appear accurate.”
The firm’s procedures, however, did not describe how the reviews should be performed nor require any review of the accuracy of the underlying data.
Therefore, Respondent violated NASO Rule 3010 and FINRA Rules 3110 and 2010.
On top of the fine of $100,000, Citi has agreed to a censure.