FINRA fined Citigroup Global Markets Inc. ("Citigroup") $5.5 million and ordered the firm to pay affected customers at least $6 million for displaying inaccurate equity research ratings and communicating materially inaccurate information in connection with such research ratings.
Between 2011 and 2016, FINRA found that Citigroup displayed inaccurate research ratings due to errors in an electronic data feed (e.g., the firm displayed a "buy" rating when the actual rating was "sell"). FINRA alleged that Citigroup failed to implement and maintain an adequate supervisory system designed to ensure accuracy of research ratings, and failed to respond appropriately to numerous red flags concerning the accuracy of research ratings.
In determining the monetary sanctions, FINRA noted that Citigroup (i) self-reported the research ratings issues, (ii) engaged outside counsel to conduct an internal forensic investigation, (iii) shared results of its internal investigation with FINRA, and (iv) took remedial steps to compensate affected customers.
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