Citigroup Fined $2 Million for ETF Sales

Mr. Robert Howard Rex's Securities Legal Blogs

Licensed for 40 years

Attorney in Boca Raton, FL

On May 1, 2012, FINRA fined Citigroup $2 million, censured the firm and ordered restitution of $146,431 to customers for selling leveraged and inverse exchange-traded funds (non-traditional ETFs) "without reasonable supervision".

The letter of acceptance waiver and consent between FINRA and Citigroup contains the following findings:

  • Citigroup consented to a fine of $500,000 in July 2011 for failure to detect or respond to a series of red flags that would have alerted them to a scheme of misappropriations by a sales representative
  • In February 2010 , they were fined $650,000 million relating to a failure to establish a system to supervise its Direct Borrowing Program
  • From January 2008 to June 2009 the company failed to maintain a supervisory system in connection with the sale of non-traditional ETF’s such as leveraged, inverse and inverse-leveraged exchange traded notes
  • Certain Citigroup brokers did not have an adequate understanding of non-traditional ETFs before recommending these products to customers
  • Certain Citigroup brokers made unsuitable recommendations of non-traditional ETFs to investors with a conservative investment objective
  • During the time frame examined by FINRA Citigroup customers bought and sold over $7.9 billion of non-traditional ETFs
  • Certain customers with a primary objective of income held non-traditional ETFs for several months including a two 59 year old  customers with conservative investment objectives who sustained losses.

If you are a conservative investor who has suffered losses on ETFs purchased from Citigroup or any other brokerage firm, you may be able to recover those losses. Please contact our office to discuss your legal rights. Nationwide representation. Free consultation. 561 391 1900.

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