Citigroup Fined $600,000 by FINRA

Monday, October 12, 2009 , , 0 Comments

$600,000? Oh that's precious.


Citigroup Inc., the third-biggest U.S. bank by assets, will pay $600,000 to settle a regulator’s claims that it inadequately supervised transactions that helped international customers avoid U.S. taxes on stock dividends.

Investigators at the Financial Industry Regulatory Authority, which polices almost 4,800 U.S. brokerages, found Citigroup’s Global Markets unit failed to supervise the system of trades and swap contracts and inadequately monitored certain communications, the regulator said today in a statement. The transactions occurred from 2002 through 2005.

“Citigroup’s inadequate supervision resulted in improper trading,” Finra enforcement chief Susan Merrill said in the statement. “Increasingly complex trading strategies must be governed by supervision that is equally sophisticated.”

A U.S. Senate inquiry last year found that Wall Street firms concocted derivatives and stock-loan deals to help clients including international hedge funds avoid hundreds of millions of dollars in taxes. New York-based Citigroup, aware that the Internal Revenue Service might deem its transactions improper, voluntarily disclosed them and paid $24 million for 2003 through 2005, the Senate’s Permanent Subcommittee on Investigations said in a report released in September 2008.

Citigroup Global Markets didn’t admit or deny wrongdoing in agreeing to settle. Citigroup spokesman Alexander Samuelson didn’t immediately respond to messages seeking comment on Finra’s announcement. He declined to comment for media reports on the fine before today’s release.

Under the system, an overseas client typically sold U.S. shares to Citigroup before dividends were paid, then later got an amount similar to the dividend through a derivative contract known as a total return swap, Finra said in the statement.

This is a joke, why am I even writing about this? Pfft, must be a slow news day.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.