Citigroup pays nearly $1m to settle trading probe

17 July 2007

Citigroup has agreed to pay $978,000 to settle an investigation accusing it of failing to adequately supervise two brokers whose trading strategies lead to losses of over $3 million for clients, it has been announced.

The fine consists of $500,000 in penalties and a further $478,000 in restitution to clients, according to a statement from regulators.

The case arose when two brokers, who had been employed at a branch of Smith Barney in New Jersey, were involved in short selling of shares in Trinity Industries.

Furthermore the pair also changed the profiles of accounts belonging to clients so as to reflect more aggressive risk tolerances.

Of the 42 clients affected by the trades, a number were dependant on retirement assets and investments for their income.

Attorney General Anne Milgram said: "The penalty and additional restitution ordered in this case is a clear demonstration that the state intends to hold broker-dealers responsible for monitoring their agents' activities, especially where the investing public is at risk."

Smith Barney has already paid the clients $1.6 million in restitution.

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