FINRA Reportedly Sanctions CitiGroup Global for Supervisory Issues regarding UITs
According to FINRA’s August Disciplinary report, on June 20, 2019, the regulator reportedly sanctioned CitiGroup Global Markets (CRD #7059, New York, NY) with a censure, a fine of $225,000.00 and customer restitution of $152,488.59 plus interest.
Without admitting or denying the findings, the firm reportedly consented to the sanctions and to the entry of findings that it failed to identify and apply sales charge discounts to certain eligible purchases of unit investment trusts (UITs).
According to FINRA, the firm allegedly failed to supervise purchases and sales of UITs resulting in customers paying excessive sales charges of $152,488.59.
CitiGroup reportedly failed to establish, maintain and enforce a supervisory system and WSPs reasonably designed to achieve compliance with applicable securities laws, regulations and FINRA rules regarding available sales charge discounts to customers’ eligible UIT purchases.
FINRA found that the firm had no WSPs that discussed the application of rollover discounts and no surveillance tools to identify available rollover discounts. Further, the firm reportedly failed to establish, maintain and enforce a supervisory system and WSPs reasonably designed to supervise UIT trading.
The firm’s surveillance alert system to detect switching of UITs and other products inadvertently excluded UITs from consideration, which the firm reportedly failed to discover for years, according to FINRA.
Although the firm’s system was not reasonable and created a possibilty of customer harm, no customer harm was identified in the transactions reviewed in this matter, according to FINRA.
For FINRA’s full findings, see FINRA Case #2016050947701.
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