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FINRA Disciplinary Action against Citigroup Global Markets, Inc.

On September 7, 2018, FINRA issued a Letter of Acceptance, Waiver and Consent in which Citigroup Global Markets, Inc. (CGMI) was censured and fined $100,000 and required to submit to FINRA a plan to remediate eligible customers who qualified for, but did not receive, the applicable mutual fund sales-charge waivers.  As well as paying $309,093 as part of restitution to eligible customers.  Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it disadvantaged certain retirement plan and charitable organization customers that were eligible to purchase Class A shares in certain mutual funds without a front-end sales charge.

According FINRA, during the investigation period (January 2011 – September 2016), CGMI failed to establish and maintain a supervisory system and written procedures designed to supervise mutual funds sales to ensure that eligible customers received the benefit of applicable sales charge waivers.  CGMI estimates that during the relevant period, approximately 274 customers accounts purchased mutual fund shares for which an available sales charge was available but was not applied.

CGMI failed to reasonably supervise the application of sales charge waivers to eligible mutual fund sales.  The firm relied on its financial advisors to determine the applicability of sales charge waivers to eligible customers but failed to maintain written policies and procedures to make correct determinations.  Additionally, the firm failed to adequately notify and train its financial advisors regarding the availability of mutual fund sales charge waivers for eligible customers.  As a result of the firm’s failure to apply available sales-charge waivers, CGMI estimates that eligible customers were overcharged around $264,844 for eligible purchases made since January 2, 2011.

It was unclear from FINRA’s announcement whether customers had initiated FINRA arbitrations or any other type of securities arbitrations.  If you believe that you have suffered losses as a result of misconduct, you may contact David A. Weintraub, P.A. 7805 SW 6th Court, Plantation, FL 33324.  By phone: 954.693.7577 or 800.718.1422.