Citigroup Global Markets To Pay $2.9 Mln To Settle SEC Underwriting Probe

(RTTNews) - Citigroup Global Markets Inc agreed to pay $2.9 million to settle the U.S. Securities and Exchange Commission allegations that the company's underwriting business willfully violated record-keeping requirements.

The SEC's order found that, from at least 2009 through May 2019, Citigroup Global Markets used an unsubstantiated and unverified method to calculate and record indirect expenses associated with its work as an underwriter.

According to the SEC's order, Citigroup Global Markets calculated an indirect expense amount based on a fixed percentage of the underwriting fee for each deal where it was engaged as a lead underwriter and then, using fixed "allocation grids," divided that amount into specific categories of expenses.

The SEC order found that, upon calculating these indirect expenses through the unsubstantiated method, Citigroup Global Markets recorded the amounts in its general ledger.

According to the order, for at least a decade, Citigroup Global Markets did not know the basis of the indirect expense calculation method and conducted no review or similar process to verify that this method was reasonable.