As part of its continuing
scrutiny of the financial industry’s meetings and events,
the National Association of Securities Dealers announced on June 6
that Citigroup Global Markets will pay $15.2 million to settle
charges that brokers in its Charlotte, N.C., branch office used
misleading materials in seminars and meetings that encouraged
hundreds of BellSouth employees to make bad investments.
In an official statement, NASD said
Citigroup failed to supervise adequately a team of brokers who held
dozens of retirement seminars and meetings between 1994 and 2002,
during which they handed out sales materials that encouraged
BellSouth employees to invest their retirement portfolios in
certain financial markets that were depicted as lucrative but
The report cites one broker who
conducted more than 40 seminars “without obtaining firm approval
for the seminars or seminar sales materials.” In addition, NASD
said “Citigroup’s compliance officials had an opportunity to review
one of the team’s seminar handouts in 2001 but failed to detect,
correct and follow up” on misstatements in the documents.
As a result of NASD’s investigation,
three brokers and two managers at Citigroup’s Charlotte office were
disciplined with personal fines and work suspensions.
NASD said $12.2 million of the
settlement will be used to pay restitution to 200 former BellSouth
employees who saw the principal in their accounts decline.
In a statement, Citigroup said, “We
take this matter seriously. The firm is working to prevent a
similar situation from occurring again.”