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Securities and Exchange Commission v. Censure Against Citigroup Global Markets Inc., et al.

raw: In the Matter of : ORDER UNDER SECTION 27A(b) OF THE

Caption
Securities and Exchange Commission v. Censure Against Citigroup Global Markets Inc., et al.
Exhibit of Citigroup Pays $20 Million to Settle SEC Action Relating to Mutual Fund Sales Practices
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summary

Citigroup Global Markets Inc. (CGMI) settled SEC charges for antifraud violations under Section 17(a) of the Securities Act and Rule 10b-10 by paying a $20 million penalty and accepting a cease-and-desist order and censure, and was subsequently granted a waiver to restore its eligibility for safe harbor protections for forward-looking statements.

paragraph

Citigroup Global Markets Inc. (CGMI) agreed to settle SEC charges for violating Section 17(a) of the Securities Act and Rule 10b-10 under the Exchange Act by failing to disclose material information to customers, including markups and conflicts of interest in securities transactions. As part of the settlement, CGMI paid a $20 million civil penalty, accepted a censure, and agreed to a cease-and-desist order prohibiting future violations. Although the settlement triggered automatic disqualification from relying on safe harbor protections for forward-looking statements, the SEC granted CGMI a waiver, finding it appropriate given the remedial measures and cooperation demonstrated.

narrative

Citigroup Global Markets Inc. (CGMI) settled SEC charges arising from violations of Section 17(a) of the Securities Act and Rule 10b-10 under the Exchange Act, which alleged failures to disclose material information to customers regarding markups and conflicts of interest in securities transactions. The SEC’s March 23, 2005 Order imposed a $20 million civil penalty, a formal censure, and a cease-and-desist order prohibiting future antifraud violations. These findings automatically disqualified CGMI from relying on the safe harbor protections for forward-looking statements under Sections 27A(c) and 21E(c) of the federal securities laws. On January 7, 2005, CGMI requested a waiver of this disqualification, citing its cooperation, remedial undertakings, and commitment to compliance. The SEC granted the waiver on March 23, 2005, determining that the circumstances warranted reinstatement of CGMI’s eligibility for safe harbor protections despite the prior enforcement action. No individual misconduct or criminal charges were alleged in the proceeding. The waiver allows CGMI to resume using forward-looking statements without the automatic legal disqualification triggered by the settlement.

Enriched metadata

Scheme
accounting-fraud (100%)
Classified accounting-fraud(confidence 100%). EDGAR detection: forms 10-K/10-Q/8-K/NT 10-K· recall 80% / precision 48%. detection rule →
Statutes
Section 27A(b)(1)(A)(ii) of the Securities ActSection 27A(b)(1)(A)(ii) of the Securities ActSection 21E(b)(1)(A)(ii) of the Securities Exchange ActSection 21E(b)(1)(A)(ii) of the Securities Exchange ActSection 17(a) of the Securities ActSection 27A(c) of the Securities ActRule 10b-10
Parties
censure against citigroup global markets inc.citigroup global markets inc.waivers from disqualification provisions to citigroup global markets inc.
Keywords
securitiessecurities exchangeexchangeorderprovisions securitiescgmiprovisionscommissionmatter orderorder undersecurities securitieswaivers disqualificationdisqualification provisionsrequires cgmiantifraud provisions

Extracted insights

Dollar amounts 1
  • $20.00M $20 million $10M–$100M
Entities 3
  • company censure against citigroup global markets inc.
  • company citigroup global markets inc.
  • company waivers from disqualification provisions to citigroup global markets inc.
Triples 8
  • Citigroup Global Markets Inc. submitted letter dated January 7, 2005
  • Citigroup Global Markets Inc. requested waivers of disqualification provisions
  • Commission issued Order Instituting Administrative and Cease-and-Desist Proceedings
  • Order imposed censure against Citigroup Global Markets Inc.
  • Order required Citigroup Global Markets Inc. to cease and desist from violations
  • Order required Citigroup Global Markets Inc. to pay $20 million civil monetary penalty
  • Commission determined request for waivers is appropriate
  • Commission granted waivers from disqualification provisions to Citigroup Global Markets Inc.
PDF
In the Matter of : ORDER UNDER SECTION 27A(b) OF THE · Source
Text layers
Extracted body text (3,947c) 

 UNITED STATES OF AMERICA 
                                                                      Before                                                                      the                                                                      
 SECURITIES AND EXCHANGE COMMISSION 
 
 
SECURITIES ACT OF 1933 
Release No. 8558 / March 23, 2005 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 51416 / March 23, 2005 
 
ADMINISTRATIVE PROCEEDING  
File No. 3-11869 
 
 
      :         
In the Matter of :      ORDER UNDER SECTION 27A(b) OF THE 
 :       SECURITIES ACT OF 1933 AND SECTION 
 :       21E(b) OF THE SECURITIES EXCHANGE 
 Citigroup Global Markets Inc., :      ACT OF 1934 GRANTING WAIVERS OF THE 
    :      DISQUALIFICATION PROVISIONS OF 
       Respondent. :      SECTION 27A(b)(1)(A)(ii) OF THE 
    :      SECURITIES ACT AND SECTION 
    :      21E(b)(1)(A)(ii) OF THE EXCHANGE ACT 
  
:            
 
 
 Citigroup Global Markets, Inc. (“CGMI”) has submitted a letter, dated January 7, 2005 
requesting waivers of the disqualification provisions of Section 27A(b)(1)(A)(ii) of the 
Securities Act of 1933 (“Securities Act”) and Section 21E(b)(1)(A)(ii) of the Securities 
Exchange Act of 1934 (“Exchange Act”) arising from the settlement of administrative and cease-
and-desist proceedings commenced by the Commission.  On March 23, 2005, pursuant to 
CGMI’s offer of settlement, the Commission issued an Order Instituting Administrative and 
Cease-and-Desist Proceedings, Making Findings, and Imposing Remedial Sanctions and a Cease-
and-Desist Order (“Order”).  The Order: (i) imposes a censure against CGMI; (ii) requires CGMI 
to cease and desist from committing or causing any violations and any future violations of Section 
17(a) of the Securities Act and Rule 10b-10 under the Exchange Act; (iii) requires CGMI to pay a 
civil monetary penalty in the amount of $20 million to the United States Treasury; and (iv) 
requires CGMI to comply with certain undertakings.   
   
The safe harbor provisions of Section 27A(c) of the Securities Act and Section 21E(c) of 
the Exchange Act are not available for any forward looking statement that is "made with respect 
to the business or operations of the issuer, if the issuer . . . during the 3-year period preceding the 
date on which the statement was first made . . . has been made the subject of a judicial or 
administrative  decree  or  order  arising  out  of  a  governmental  action  that  (I)  prohibits  future  
violations of the antifraud provisions of the securities laws; (II) requires that the issuer cease and 

 
 
 
                                                                            -2-
desist  from  violating  the  antifraud  provisions  of  the  securities  laws;  or  (III)  determines  that  the  
issuer violated the antifraud provisions of the securities laws[.]" Section 27A(b)(1)(A)(ii) 
of the Securities Act; Section 21E(b)(1)(A)(ii) of the Exchange Act. The disqualifications may be 
waived  "to  the  extent  otherwise  specifically  provided  by  rule,  regulation,  or  order  of  the  
Commission." Section 27A(b) of the Securities Act; Section 21E(b) of the Exchange Act. 
 
   Based on the representations set forth in CGMI’s January 7, 2005 request, the 
Commission has determined that, under the circumstances, the request for waivers of the 
disqualifications resulting from the entry of the Order is appropriate and should be granted. 
 
   Accordingly, IT IS ORDERED, pursuant to Section 27A(b) of the Securities Act and 
Section 21E(b) of the Exchange Act, that waivers from the disqualification provisions of 
Section 27A(b)(1)(A)(ii) of the Securities Act and Section 21E(b)(1)(A)(ii) of the Exchange Act 
as to CGMI resulting from the entry of the Order are hereby granted. 
 
                By the Commission. 
 
 
   
  Jonathan G. Katz 
                                                Secretary
OCR text (3,495c · tika · 95% conf) 
UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
 
SECURITIES ACT OF 1933 
Release No. 8558 / March 23, 2005 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 51416 / March 23, 2005 
 
ADMINISTRATIVE PROCEEDING  
File No. 3-11869 
  
  :  
In the Matter of :  ORDER UNDER SECTION 27A(b) OF THE 

 :   SECURITIES ACT OF 1933 AND SECTION 
 :   21E(b) OF THE SECURITIES EXCHANGE 

 Citigroup Global Markets Inc., :  ACT OF 1934 GRANTING WAIVERS OF THE 
  :  DISQUALIFICATION PROVISIONS OF 
     Respondent. :  SECTION 27A(b)(1)(A)(ii) OF THE 
  :  SECURITIES ACT AND SECTION 
  :  21E(b)(1)(A)(ii) OF THE EXCHANGE ACT 
  :  
 
 
 Citigroup Global Markets, Inc. (“CGMI”) has submitted a letter, dated January 7, 2005 
requesting waivers of the disqualification provisions of Section 27A(b)(1)(A)(ii) of the 
Securities Act of 1933 (“Securities Act”) and Section 21E(b)(1)(A)(ii) of the Securities 
Exchange Act of 1934 (“Exchange Act”) arising from the settlement of administrative and cease-
and-desist proceedings commenced by the Commission.  On March 23, 2005, pursuant to 
CGMI’s offer of settlement, the Commission issued an Order Instituting Administrative and 
Cease-and-Desist Proceedings, Making Findings, and Imposing Remedial Sanctions and a Cease-
and-Desist Order (“Order”).  The Order: (i) imposes a censure against CGMI; (ii) requires CGMI 
to cease and desist from committing or causing any violations and any future violations of Section 
17(a) of the Securities Act and Rule 10b-10 under the Exchange Act; (iii) requires CGMI to pay a 
civil monetary penalty in the amount of $20 million to the United States Treasury; and (iv) 
requires CGMI to comply with certain undertakings.   
   

The safe harbor provisions of Section 27A(c) of the Securities Act and Section 21E(c) of 
the Exchange Act are not available for any forward looking statement that is "made with respect 
to the business or operations of the issuer, if the issuer . . . during the 3-year period preceding the 
date on which the statement was first made . . . has been made the subject of a judicial or 
administrative decree or order arising out of a governmental action that (I) prohibits future 
violations of the antifraud provisions of the securities laws; (II) requires that the issuer cease and 



 

 
 
 -2-

desist from violating the antifraud provisions of the securities laws; or (III) determines that the 
issuer violated the antifraud provisions of the securities laws[.]" Section 27A(b)(1)(A)(ii) 
of the Securities Act; Section 21E(b)(1)(A)(ii) of the Exchange Act. The disqualifications may be 
waived "to the extent otherwise specifically provided by rule, regulation, or order of the 
Commission." Section 27A(b) of the Securities Act; Section 21E(b) of the Exchange Act. 
 

   Based on the representations set forth in CGMI’s January 7, 2005 request, the 
Commission has determined that, under the circumstances, the request for waivers of the 
disqualifications resulting from the entry of the Order is appropriate and should be granted. 
 

   Accordingly, IT IS ORDERED, pursuant to Section 27A(b) of the Securities Act and 
Section 21E(b) of the Exchange Act, that waivers from the disqualification provisions of 
Section 27A(b)(1)(A)(ii) of the Securities Act and Section 21E(b)(1)(A)(ii) of the Exchange Act 
as to CGMI resulting from the entry of the Order are hereby granted. 
 
                By the Commission. 
 
 
   
  Jonathan G. Katz 
  Secretary