31 Jul 2019
A New York-based brokerage unit of Citigroup Inc. will pay $1.25 million for inadequately screening 10,400 employees over a 7-year period, an industry regulator said Monday.
The compliance lapses by Citigroup Global Markets Inc. included the firm’s failure to collect the fingerprints of at least 520 employees, according to the Washington, D.C.-based Financial Regulatory Authority (FINRA), which as a nongovernmental regulator supervises brokerage firms and exchange markets on behalf of the US Securities and Exchange Commission.
The compliance violations led to Citigroup hiring at least three individuals who had previously been convicted of crimes and were consequently disqualified from employment at the brokerage, FINRA said in a statement. The company ultimately screened the three individuals and uncovered their criminal records, though the screening took place as late as 14 months after the formal hiring process had ended, the regulatory organization said.
Because Citigroup Global Markets launched an employee review after many of its improperly screened staff had left the company, FINRA was unable to determine if an additional 140 individuals were similarly disqualified from employment.
The violations, which occurred from January 2010 through May 2017, involved employees who were deemed “non-registered associated persons,” and as such were not brokers.
“FINRA member firms must live up to their responsibility as a gatekeeper protecting investors from bad actors,” said Susan Schroeder, the executive vice president of the organization’s enforcement department, in a statement. “It is important that firms appropriately screen all employees for past criminal or regulatory events that can disqualify individuals from associating with member firms, even in a non-registered capacity.”
Citigroup Global Markets, which voluntarily disclosed the violations to FINRA, neither admitted nor denied the charges.
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