Citibank fined for telling clients to buy when it meant sell

The Pak Banker - - FRONT PAGE - -AP

NEW YORK: Cit­i­group Inc. will pay $11.5 mil­lion to re­solve Fi­nan­cial In­dus­try Reg­u­la­tory Au­thor­ity claims that a bro­ker­age unit harmed re­tail cus­tomers by dis­play­ing in­ac­cu­rate re­search rat­ings for hun­dreds of se­cu­ri­ties for nearly five years. Cit­i­group Global Mar­kets Inc. showed in­cor­rect rat­ings -- such as "buy" in­stead of "sell" -- to bro­kers, cus­tomers and su­per­vi­sors on 38 per­cent of the eq­ui­ties cov­ered by its re­search depart­ment from Fe­bru­ary 2011 to De­cem­ber 2015, Finra said in a state­ment on Thurs­day.

Er­rors in an elec­tronic feed of data pro­vided to a clear­ing firm caused the in­cor­rect rat­ings, Finra said. Cit­i­group failed to cor­rect the prob­lems de­spite nu­mer­ous red flags and failed to con­duct suf­fi­cient test­ing to ver­ify its rat­ings data, the reg­u­la­tor said.

"The dis­play and use of in­com­plete and in­ac­cu­rate re­search rat­ings can have wide­spread, ad­verse con­se­quences to cus­tomers," Su­san Schroeder, Finra's head of en­force­ment, said in the state­ment. "Even when such in­ac­cu­ra­cies are caused by tech­nol­ogy prob­lems, firms should re­act quickly to ad­dress those er­rors." The firm agreed to re­solve the reg­u­la­tor's claims with­out ad­mit­ting or deny­ing wrong­do­ing, and will pay a $5.5 mil­lion fine and pro­vide $6 mil­lion in com­pen­sa­tion to re­tail cus­tomers.

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