Citigroup subsidiary agrees to pay $35,000 settlement

 
DENVER (Nov. 24, 2015) – In a consent order signed by Colorado Securities Commissioner Gerald Rome on November 20, Citigroup Global Markets, Inc. (CGMI) has agreed to pay a penalty in the amount of $35,000 to the state of Colorado. The order came after a Division of Securities participated in an investigation conducted by a number of state securities regulators, which revealed that certain unlicensed members of the CGMI team were conducting business that required a license under the Colorado Securities Act.

CGMI is a registered broker-dealer firm that is a subsidiary of Citigroup, Inc. As part of CGMI’s businesses model, primary customer-facing broker-dealer agents are known as “Financial Advisers” and must be licensed in all states in which they work with clients. CGMI also employs “Sales Assistants” who assist Financial Advisers and customers with administrative and operational support.

Beginning with records dating back to 2009, the investigation showed that sales assistants assigned to aid financial advisers routinely processed client requests to purchase or trade stock when a financial adviser was busy or unavailable. While done on behalf of the licensed agent, sales assistants who conducted these transactions were not properly trained or licensed to do so, and therefore violated the law regarding the brokering of securities. The law requires that any assistant who conducts transactions on behalf of a financial adviser to have passed the necessary exams and hold the proper license in any state where the financial adviser is active, whereby they are considered “Registered Sales Assistants.”

In 2011, CGMI adopted practices that more thoroughly validate the state registration status of anyone accepting a client order. 

“The use of unlicensed representatives is an issue that seems to be cropping up more and more consistently,” commented Rome. “We pursue these types of actions in an attempt to encourage firms, both big and small, to really do their due diligence in ensuring that anyone who is providing advice, selling securities, or completing securities-related transactions are authorized to do so.”

The stipulation for consent order notes that CGMI fully cooperated with the investigation, and has made the required procedural changes as well as paid the fine without admitting or denying the findings of fact or conclusions of law contained in the order.

The Division of Securities can be contacted at (303) 894-2320 or online at dora.colorado.gov/dos.
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Media Contact:
Jillian Sarmo
Division of Securities
p: 303-894-2878