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FINRA Fines Citigroup $725,000 for Failure to Disclose Conflicts of Interest

By George Miller of Shustak Reynolds & Partners, P.C. posted on Thursday, January 19, 2012.

FINRA started the new year off by levying a $725,000.00 fine against Citigroup Global Markets, Inc., for failing to disclose potential conflicts of interest in certain research reports the firm published from January 2007 through March 2010. According to FINRA, Citigroup (a) owned a 1% or greater interest in, or (b) received investment banking and other revenue from several companies identified in its research reports, but did not disclose these fact to its customers.

According to Brad Bennett, FINRA’s Chief of Enforcement, “Firms need to provide investors with full and accurage information so they will be able to take it into consideration before making an investment decision.” Citigroup neither admitted nor denied FINRA’s allegations, but agreed to pay $725,000.00 to settle the charges.

Broker-dealers not only have a duty not to misrepresent material facts, but also to disclose all relevant, material information to their customers when recommending an investment. Failures to disclose material information, known as omissions, may give rise to broker-dealer liability. If you have suffered losses as a result of a broker-dealer’s failure to disclose or other misconduct,contact our firm’s managing partner, Erwin Shustak, at (619) 696-9500 [email protected] Our firm routinely handles securities and investment disputes involving misrepresentations, omissions and other broker misconduct.

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