Citigroup Global Markets has been fined $725,000 by the Financial Industry Regulatory Authority (FINRA) for not disclosing certain potential conflicts of interest in its research reports published from January 2007 through March 2010.
The research reports did not include the conflicting activities such as managed or co-managed public securities offerings, received investment banking or other revenue from, made a market in the securities of and/or had a 1% or greater beneficial ownership in covered companies.
Additionally, Citigroup research analysts failed to disclose the same potential conflicts of interest in connection with public appearances.
FINRA executive vice president and chief of Enforcement Brad Bennett said that failure over required conflict of interest disclosures had prevented investors from being aware of potential biases in its research recommendations.
"Firms need to provide investors with full and accurate information so they will be able to take it into consideration before making an investment decision," Bennett added.
FINRA further alleged that the database used to identify and create the disclosures was inaccurate and that the group failed to have reasonable supervisory procedures to ensure that populating research reports with required disclosures.
Citigroup Global Markets had neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.