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October 03, 2013 at 06:32 AM
Massachusetts securities regulator William Galvin on Thursday fined Citigroup Global Markets (CGMI) $30 million for misconduct by a research analyst.
In December, the Massachusetts Securities Division said, the analyst provided large U.S. hedge fund and institutional clients with confidential unpublished research information about Hon Hai, a major supplier of Apple iPhones.
Recipients of the confidential, nonpublic information were SAC Capital, T. Rowe Price, Citadel and GLG Partners.
In addition to the fine, the securities division censured CGMI and required it to perform a three-year review of its policies and procedures on disclosure of confidential nonpublic research information.
“It seems that the concept that investors are to be presented with a level playing field when it comes to the product of research analysts is a lesson that must be learned over and over again,” said Galvin, in a statement. “But it’s important that it should be taught as often as necessary.”
CGMI has previously settled with the Massachusetts Securities Division for federal and state securities violations relating to research analysts in the 2003 Global Research Analyst Settlement and more recently in a 2012 division consent order in connection with Facebook’s initial public offering, the securities division said.
In this case, the securities division found that Kevin Chang, a research analyst employed by a Taiwanese affiliate of CGMI, released unpublished research to the named hedge fund and institutional clients one day before publishing virtually identical information for the public.
“On Dec. 13, 2012, following the publication of a report cutting Hon Hai production numbers by the Macquarie Group, an Australian competitor to CGMI in covering Hon Hai, Kevin Chang was pressured by large hedge fund and institutional clients for his research on Hon Hai,” the securities division said.
