Morgan Stanley Smith Barney LLC ("MSSB") and Citigroup Global Markets, Inc. ("CGMI") agreed to pay over $2.96 million each to settle SEC charges alleging that the firms had misled investors about a foreign exchange ("forex") trading program.
The SEC Order found that certain registered representatives of CGMI and MSSB had pitched a forex trading program using written and oral presentations based on past performance and risk metrics. The SEC Order determined that these presentations were "materially misleading" because they failed to disclose adequately that the investors "could be placed into the program using substantially more leverage than was disclosed" and that "mark-ups would be charged on each trade."
The monetary sanctions for each respondent included $624,458.27 in disgorgement, $89,277.34 in prejudgment interest, and $2,250,000 in civil money penalties.
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