Citigroup Global Markets

Kurta Law is investigating recommendations by Citigroup Global Markets (CRD#: 7059) brokers. Investors should be aware that Citigroup Global Markets has faced multi-million dollar fines from the SEC and FINRA. The firm is registered as a broker-dealer and investment adviser and has headquarters in New York, New York.

Citigroup Global Markets has operated under 36 names, including:

• Capital Management Division
• Trak for Mutual Fund at Net Asset Value
• Trak for Consulting Group Capital Markets Funds
• SSB Collective Funds Asset Allocation Service
• Smith Barney
• Harris Upham & Company
• Smith Barney Shearson Inc.
• Smith Barney Asset Management
• SB Advisor
• Salomon Smith Barney Inc.

Fees and Conflicts of Interest

Firms are required to disclose their fees and conflicts of interest in their Customer Relationship Summary (CRS). Citigroup Global Markets describes the following conflicts of interest:

• Brokerage accounts charge fees on each transaction, but these fees vary depending on the investment, amount invested, and can be negotiable, allowing some clients to pay lower fees on certain transactions. The firm is incentivized to encourage trading to earn fees.
• Investment advisory accounts generally charge fees based on the value of the assets in your account, incentivizing the firm to encourage increasing your assets. Some of these fees are also negotiable.
• You’ll pay investment-specific fees for mutual funds, alternative investment funds, ETFs, variable insurance products, annuities, and other investments.
• Investors pay fees, interest, and other costs associated with margin loans and other loans obtained through Citigroup Global Markets’ clearing firm, Pershing LLC.
• You will also be charged account maintenance, management, advisory, and account transfer fees, and other account-level fees.
• Citigroup Global Markets receives compensation through revenue sharing agreements with the sponsors of certain investments and through its relationship with Pershing.
• When acting as the principal in a securities transaction, Citigroup Global Markets has an incentive to offload unwanted securities onto you and to purchase high-demand securities. The firm may also hedge its risk when acting as principal by taking certain positions, and this can affect the price of the securities in those transactions.

Broker-Dealer Services

In addition to stocks and bonds, Citigroup Global Markets offers the following investment products. However, these products often feature a degree of risk beyond the tolerance of most retail investors.

• Alternative investments
• Annuities and variable insurance products
• Exchange-traded funds
• Mutual funds
• Options

Regulatory Actions

Citigroup Global Markets discloses its history of regulatory actions, including million-dollar fines by the SEC and FINRA, in its detailed BrokerCheck record.

$1.4 Million FINRA Fine

On October 7, 2024, Citigroup Global Markets consented to the entry of findings that it allegedly failed to collect margin on over-the-counter (OTC) equity option contracts it held with two affiliated entities.

A Letter of Acceptance, Waiver & Consent (AWC) alleged that the firm failed to collect initial and maintenance margin payments on these contracts, therefore extending credit to these affiliated entities in violations of federal securities laws and FINRA Rules.

This allegedly resulted in inaccurate calculations of the firm’s net capital and inaccurate FOCUS reports being filed with the SEC. The firm allegedly also improperly executed these OTC equity option contracts in cash accounts.

FINRA censured the firm and ordered it to pay a $1.4 million fine. You can access the full AWC here.

$1.975 Million SEC Fine

On September 28, 2023, the Securities and Exchange Commission filed a regulatory action against Citigroup Global Markets and Citi International Financial Services, alleging that the firms made approximately 31,600 securities recommendations to investors without providing a Form CRS or the disclosures required by Regulation Best Interest from June 30, 2020, to at least March 2021.

The SEC ordered the firms to cease and desist from future violations of Regulation Best Interest and Section 17(A)(1) of the Securities Exchange Act of 1934 and Rule 17A-14(F)(3) thereunder. The firm was also censured and fined $1,975,000.

$2.5 Million FINRA Fine

On September 26, 2023, FINRA alleged in an AWC that Citigroup Global Markets violated the Short Tender Rule by over-tendering shares in 13 partial tender offers, wrongfully received $5.7 million as a result, and also failed to establish a supervisory system to achieve compliance with this rule.

The firm allegedly over-tendered shares by calculating the number of shares available on an account-by-account basis and failing to consider its overall net short position, generating gains for the firm.

FINRA censured Citigroup Global Markets, fined it $2.5 million, and ordered the firm to pay a disgorgement of $5,771,489. You can read the full AWC here.

Alleged Inaccurate Trade Confirmations

On September 11, 2023, Citigroup Global Markets consented to the entry of findings that it allegedly issued approximately 37,000 inaccurate trade confirmations from October 2016 through July 2020 by reporting to act as an agent in transactions where it acted as principal.

The firm was censured by FINRA and fined $250,000. You can access the full AWC here.

$2.9 Million SEC Fine

On August 29, 2023, the SEC filed a regulatory action against Citigroup Global Markets alleging that the firm failed to establish policies and procedures for its method of estimating its indirect expenses associated with its underwriting of securities offerings.

The SEC ordered the firm to cease and desist from violations of Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-3 thereunder, and fined the firm $2.9 million.

Brokers with Misconduct Allegations on Their Records

Kurta Law is aware of the following current or former brokers associated with Citigroup Global Markets with investor disputes on their BrokerCheck records. This is not an exhaustive list, and investors who have concerns about their broker should contact a securities attorney.

• Brian Sodol: https://www.kurtalawfirm.com/blog/brian-sodol/ 
• Charles Churchill: https://www.kurtalawfirm.com/blog/charles-churchill/ 
• Scott Valentine: https://www.kurtalawfirm.com/blog/scott-valentine/ 
• Robbie Msallem: https://www.kurtalawfirm.com/blog/robbie-msallem/ 
• Michael Fowler: https://www.kurtalawfirm.com/blog/michael-fowler/ 
• Evan Chen: https://www.kurtalawfirm.com/blog/evan-chen/ 
• Thomas Tibaldi: https://www.kurtalawfirm.com/blog/thomas-tibaldi/ 
• Gaetano Ciambriello: https://www.kurtalawfirm.com/blog/gaetano-ciambriello/ 

Kurta Law Can Help

Investors who lost money working with a Citigroup Global Markets broker or advisor should reach out to an investment fraud lawyer for help. Our attorneys offer free case evaluations and do not charge a fee unless we win your case. Call (877) 600-0098 or email info@kurtalawfirm.com.