Financial Group Settles SEC Charges For Supervisory And Accounting Control Failures

A financial group agreed to pay a total of $10.5 million to settle separate SEC enforcement actions against two affiliated entities for (i) supervisory and recordkeeping deficiencies and (ii) internal accounting control failures.

According to the first SEC Order, Citigroup Global Markets Inc. ("CGMI") (a wholly-owned subsidiary of Citigroup, Inc.) failed to adequately supervise several of its traders who engaged in mismarking positions and unauthorized trading in Citi proprietary accounts, resulting in inaccurate books and records. The mismarking episodes, which occurred on different trading desks, "involved opaque, illiquid positions that were overvalued by traders and not effectively price verified by Citi's valuation control group." Two of the episodes involved unauthorized trading in U.S. Treasury securities that resulted in concealed losses of millions of dollars.