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Member Firm Disciplined for Improper Market Timing of Mutual Funds by Brokers
Citigroup Global Markets Inc.
Hearing Board Decision: 07-105
24 Jul 2007

Summary Back to Top
Case Note
Violated NYSE Rule 342 by failing to reasonably supervise certain business activities and to establish and maintain appropriate procedures for supervision and control with respect to trading of mutual funds and mutual fund-like sub-accounts of variable annuities; violated NYSE Rules 401(a) and 476(a) by failing to prevent certain brokers from engaging in violative market timing of mutual funds, including use of deceptive practices related to market timing of mutual funds; violated Section 17(a) of Securities Exchange Act of 1934, Rules 17a-3 and 17a-4 thereunder, and NYSE Rule 440 by failing to make or preserve accurate books and records reflecting or relating to order communication and entry time for mutual fund shares, rejection or cancellation of trades related to market timing, and orders or confirmations for transactions executed by firm employees in variable annuity products sub-accounts held away from firm – Consent to censure, total payment of $50,000,000 to be distributed as follows: (a) $35,000,000 as disgorgement shall be placed into distribution fund; (b) penalty of $10,000,000 shall be paid as follows: $5,000,000 directly to NYSE Regulation and $5,000,000 directly to distribution fund; and (c) penalty of $5,000,000 shall be paid to State of New Jersey; and undertakings.

Case Summary
For Case Summary See News Release Link Below.

View Text of Disciplinary Decision (pdf)

http://www.nyse.com/pdfs/07-105.pdf