The Financial Industry Regulatory Authority slammed Citi International Financial Services with a $600,000 fine for charging excessive markups and markdowns on corporate and agency bond transactions, the securities industry watchdog announced today.
In addition, it ordered more than $648,000 in restitution and interest to more than 3,600 customers.
FINRA found that from July 2007 through September 2010 those markups and markdowns were “excessive given market conditions, the cost of executing the transactions and the value of the services rendered to the customers,” according to a statement from the regulator. The markups and markdowns ranged from 2.73% to over 10%, it said.
In addition, FINRA found that from April 2009 through June 2009 Citi International neglected to exercise “reasonable diligence to buy or sell corporate bonds so that the resulting price to its customers was as favorable as possible under prevailing market conditions,” the statement said.
“The markups and markdowns charged by Citi International were outside of appropriate standards for fair pricing in debt transactions, and FINRA will continue to identify and address transactions that violate fair pricing standards,” Thomas Gira, executive vice president of FINRA Market Regulation, said in the statement.
"We have enhanced our systems and procedures and are pleased to have resolved his matter,” said Natalie Marin, a Citi spokeswoman.
Citi International neither admitted nor denied the charges.