Citigroup Global Markets to Pay $250K to Settle with FINRA Over Inaccurate Reporting in Trade Confirmations

Under the terms of a settlement with the Financial Industry Regulatory Authority (FINRA), broker-dealer Citigroup Global Markets Inc (CGMI) has agreed to pay a $250,000 fine and accept a censure.

According to FINRA, from October 2016 to July 2020, CGMI issued approximately 37,000 trade confirmations to its customers that contained inaccurate information. These confirmations were related to the firm's principal trading activity on its alternative trading system, CitiBLOC ATS.

The company, CGMI, made incorrect reports by stating that it acted as an agent during trade executions, when in reality it acted as a principal. As a result, CGMI violated several regulations including Exchange Act Rule IOb-10, promulgated under Exchange Act Section I0(b), Exchange Act Section 17(a), Exchange Act Rule 17a- 3, and FlNRA Rules 2232, 4511, and 2010.

Specifically, Exchange Act Rule 10b-10 requires broker-dealers to provide securities trading clients with a confirmation disclosing certain basic terms of the transaction before or at the completion of each transaction.

Rule 10b-10(a)(2) requires broker-dealers to disclose whether they are "acting as agent for [the] customer, as agent for some other person, as agent for both such customer and some other person, or as principal for its own account."

FINRA Rule 2232(a) requires member firms, at or before the completion o f any transaction in any security effected for or with an account o f a customer, to provide such customer with written confirmation that conforms with the requirements of Exchange Act Rule I0b-10.

This is the second fine that CGMI has had to pay in the past month. At the end of August, the company agreed to pay a civil penalty of $2.9 million​ to settle with the U.S. Securities and Exchange Commission (SEC) for willfully violating recordkeeping requirements concerning expenses that the firm incurred in connection with its underwriting business.