DOW JONES NEWSWIRES
The Financial Industry Regulatory Authority has fined Citigroup Inc.'s (C) Global Markets group $3.5 million for allegedly posting inaccurate data about deals it was making on mortgage-backed securities during the subprime mortgage and housing market crisis.
Citigroup wasn't immediately available for comment, but has neither admitted nor denied the charges, Finra said.
The regulatory agency fined the banking giant for allegedly providing inaccurate mortgage performance information, as well as for supervisory failures and other violations in connection with its residential mortgage-backed securitizations, or RMBS.
Finra claims Citigroup posted inaccurate mortgage performance data on its website from January 2006 to October 2007. The bank didn't remove the information until early May 2012, despite receiving several warnings that it was inaccurate, the regulatory agency said.
"Investors use this data to inform their decisions and in this case, for over six years, investors potentially used faulty data to assess the value of the RMBS," said Brad Bennett, FINRA's chief of enforcement.
Issuers of RMBS are required to disclose information on the historical performance of similar securities offered in the past, as a way for investors to assess the value and risk associated with their securities and the mortgages on which they are based.
Citigroup's purported inaccurate information about three subprime, or Alt-A, securitizations may have affected investors' view of subsequent RMBS, the regulatory group said.
Finra also said the bank allegedly failed to supervise the pricing of mortgage-backed securities, lacked procedures to verify traders' prices, and didn't maintain required records, including, for instance, documentation of margin calls leading to the re-pricing of certain securities.
In 2010, Citigroup was fined $75 million by the Securities and Exchange Commission for allegedly misleading investors about $39 billion in subprime-mortgage assets.
-By Kristin Jones; Dow Jones Newswires; 212-416-2208; firstname.lastname@example.org