Citigroup admits to 15-year blue sheet violation
13 July 2016 Washington DC
Image: Shutterstock
Citigroup Global Markets has admitted wrongdoing and agreed to a $7 million penalty to settle charges that it provided incomplete blue sheet information to the US Securities and Exchange Commission (SEC) over a 15-year period.
The SEC found that a computer coding error caused Citigroup to omit certain trade information requested in the blue sheet data by the SEC. This data included time of trades, volumes traded, prices, and other customer-identifying information.
In total, the SEC alleged that Citigroup failed to report 26,810 securities transactions across more than 2,300 blue sheet requests, between May 1999 and April 2014.
The resulting $7 million penalty is the largest ever issued for blue sheet violations, and, according to the SEC, reflects the significant length of time that the error went unchecked.
The SEC also found that, once it discovered the coding error, Citigroup failed to report the incident to the SEC. Citigroup then took no steps to produce the omitted data until nine months later.
Robert Cohen, co-chief of the SEC enforcement division’s market abuse unit, said: “Broker-dealers have a core responsibility to promptly provide the SEC with accurate and complete trading data for us to analyse during enforcement investigations.”
He added: “Citigroup did not live up to that responsibility for an inexcusably long period of time, and it must pay the largest penalty to date for blue sheet violations.”
A Citigroup spokesperson said: “We are pleased to have resolved this matter.”
The case follows several other high-profile penalties paid for violations around blue sheet information.
In September 2015 Credit Suisse Securities admitted that technological and human errors led to the omission of more that 550,000 reportable trades from blue sheet responses over two years, paying a $4.25 million penalty.
In June 2015, OZ Management LP paid a $4.25 million penalty for similar offences over almost six years, and in January 2014 Scottrade paid $2.5 million for submitting incomplete blue sheet responses for more than six years.
The SEC found that a computer coding error caused Citigroup to omit certain trade information requested in the blue sheet data by the SEC. This data included time of trades, volumes traded, prices, and other customer-identifying information.
In total, the SEC alleged that Citigroup failed to report 26,810 securities transactions across more than 2,300 blue sheet requests, between May 1999 and April 2014.
The resulting $7 million penalty is the largest ever issued for blue sheet violations, and, according to the SEC, reflects the significant length of time that the error went unchecked.
The SEC also found that, once it discovered the coding error, Citigroup failed to report the incident to the SEC. Citigroup then took no steps to produce the omitted data until nine months later.
Robert Cohen, co-chief of the SEC enforcement division’s market abuse unit, said: “Broker-dealers have a core responsibility to promptly provide the SEC with accurate and complete trading data for us to analyse during enforcement investigations.”
He added: “Citigroup did not live up to that responsibility for an inexcusably long period of time, and it must pay the largest penalty to date for blue sheet violations.”
A Citigroup spokesperson said: “We are pleased to have resolved this matter.”
The case follows several other high-profile penalties paid for violations around blue sheet information.
In September 2015 Credit Suisse Securities admitted that technological and human errors led to the omission of more that 550,000 reportable trades from blue sheet responses over two years, paying a $4.25 million penalty.
In June 2015, OZ Management LP paid a $4.25 million penalty for similar offences over almost six years, and in January 2014 Scottrade paid $2.5 million for submitting incomplete blue sheet responses for more than six years.
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