According to the Wall Street Journal, three one-time in-house brokers - who worked for former Citi unit Smith Barney - have been subpoenaed following allegations that customers were misled over investments in municipal bonds and mortgage debt.
Sources close to the company claim that following a 77 per drop in the debt funds' value, the three individuals had reached the conclusion that Citi had mismanaged the funds and neglected to keep clients sufficiently up to speed.
Both Citi and the SEC declined to comment on these latest developments, but the business insists its disclosure was satisfactory and that customers had been told the debt funds were particularly volatile.
Last week, the news provider reported that Citi plans to hire hundreds of new bankers over the next few years as part of a widespread recruitment drive.
By Asim Shah