The third-biggest bank in the U.S. – Citigroup Inc. – was imposed a fine of $15 million by the Financial Industry Regulatory Authority as it failed to monitor research analysts and the way they have been operating with material non-public information.
The Executive Vice President of Finra’s Office of Fraud Detection and Market Intelligence – Cameron Funkhouser shared in a statement, which was cited by Bloomberg: “Citigroup did not enforce the boundaries of permissible communications to ensure that its analysts did not provide certain clients with improper access to non-public research information.”
Despite the fines modest size, it is considered as a sign of the minor tolerance that financial regulatory authorities have towards analysts who disclose selected information or compromise their independence by involving themselves in corporate deals. The U.S.-based bank settled the allegations with the regulator, and neither admitted, nor denied the charges.
“We are pleased to have resolved and put this matter behind us,” a Citigroup spokeswoman said in a statement, cited by Reuters. “Citi takes its regulatory compliance obligations seriously, and we believe we have strong procedures and controls in place to address the issues that FINRA has raised in this matter. We are continually working to improve those controls and procedures going forward.”
People familiar with the situation reported that Citigroup is not the only bank, which is facing allegations. According to the same people, there are at least seven banks, including JPMorgan Chase & Co. and Goldman Sachs Group Inc., which may receive fines amounting to a total of $50 million as part of an agreement they have with Finra.
Citigroup Inc. rose 1.38% to close at $54.40 per share yesterday, marking a one-year change of +3.80% and valuing the lender at $164.80 billion. The companys shares stood at €43.670 in Frankfurt at 10:03 GMT. According to CNN Money, the 25 analysts offering 12-month price forecasts for Citigroup Inc. have a median target of $59.00, with a high estimate of $66.00 and a low estimate of $48.00. The median estimate represents a +8.46% increase from the last price of $54.40.
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