← Broker database 2021-12-02
Citigroup Global Markets Inc. Fined for Failing to Amend Form U4s Timely
According to FINRA, Citigroup Global Markets Inc. was censured and fined $375,000 for failing to amend Form U4s of registered representatives to disclose unsatisfied tax liens and judgments.
The firm was found in violation of its obligation to maintain accurate Form U4 disclosures for its registered representatives. When the firm received wage garnishment orders for its representatives, it failed to conduct sufficient inquiries to determine if the underlying events triggering the garnishment orders involved disclosable liens or judgments that should have been reported on the representatives' Form U4s. The firm's supervisory system was not reasonably designed to ensure proper disclosure.
The core problem was that the firm relied on representatives to self-determine whether wage garnishment orders resulted from reportable events, without conducting independent reviews or further inquiries. This reliance on registered representatives' own determinations, without verification, created a supervisory gap that allowed Form U4 amendments to be filed late or not at all.
Form U4 is the Uniform Application for Securities Industry Registration or Transfer, which contains important background information about registered representatives, including disclosures about liens, judgments, bankruptcies, and regulatory actions. These disclosures are publicly available through FINRA's BrokerCheck system and help investors make informed decisions about whom to work with. Investors should regularly check their financial advisor's BrokerCheck record to review disclosure events and understand any red flags. This case underscores the regulatory requirement that firms must maintain accurate and timely disclosures, not simply rely on representatives to self-report. The firm has since revised its supervisory system and procedures to address these deficiencies.