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Citigroup Global Markets Fined $100,000 for Municipal Securities Registration Violations
According to FINRA, Citigroup Global Markets Inc. was censured and fined $100,000 for permitting three associated persons to engage in activities requiring qualification as municipal securities representatives when they were not properly registered.
The three associated persons co-authored 470 municipal securities research reports with qualified municipal securities representatives, even though they were not registered in the required capacity. One of the associated persons authored an additional four reports without a qualified co-author.
Municipal Securities Rulemaking Board (MSRB) Rules G-2 and G-3 require that individuals engaging in municipal securities activities be properly qualified and registered. These requirements exist to ensure that individuals advising on or analyzing municipal securities have demonstrated the knowledge and competence required to perform these functions.
The firm discovered the violation when a new supervisor observed that these associated persons were not registered as municipal securities representatives. The firm then conducted a review of its municipal research licensing practices and suspended publication of municipal bond research reports until the entire municipal research team had taken and passed the required Series 52 examination.
This case serves as a reminder that firms must maintain accurate records of employee registrations and ensure that individuals are properly qualified before engaging in activities that require specific licenses. Investors rely on research reports being prepared by qualified professionals who have demonstrated their knowledge of the relevant securities and regulations.