Richard C. Casey, a Manhattan federal judge, has denied a motion to dismiss any allegations in regards to two Citigroup executives - CEO Thomas W. Jones, and treasurer/CFO Lewis E. Daidone - who allegedly cheated customers out of millions of dollars in savings that a transfer agent affiliate of the firm's Smith Barney funds created, Dow Jones reports.
Citigroup settled the charges last year by paying $208 million in restitution to Citigroup mutual fund customers who were affected by the transfer agency arrangements.
When settling, Citigroup denied any wrongdoing.
The SEC believes that Jones and Daidone were "principally responsible" for the scheme, which took place from 1999 to 2004.
The SEC complaint alleges that the asset management division of Citigroup took the discounts from using an allied transfer agent system, rather than passing the savings to the mutual funds and their customers.