Citigroup Global Markets Inc. was fined $1.25 million by the Financial Industry Regulatory Authority on Monday for failing to conduct timely and adequate background checks and fingerprint non-registered associated persons.
From January 2010 through May 2017, CGMI failed to conduct timely or adequate background checks on approximately 10,400 non-registered associated persons, and also failed to fingerprint at least 520 of them until after they began their association with CGMI, thus preventing the firm from determining whether any individuals were subject to statutory disqualification from associating with a FINRA member firm.
The failure to fingerprint resulted in three individuals who were subject to statutory disqualification because of criminal convictions to associate, or remain associated, with the firm.
Federal securities laws require broker-dealers to fingerprint certain associated persons working in a non-registered capacity prior to or upon association with the firm, FINRA explained.
“While CGMI fingerprinted other non-registered associated persons, it failed to screen them as required by federal securities laws, instead limiting its screening to what was required by federal banking laws,” FINRA said.
“FINRA member firms must live up to their responsibility as a gatekeeper protecting investors from bad actors,” said Susan Schroeder, head of FINRA enforcement. “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.”
In settling the matter, CGMI neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
— Check out Merrill Could Pay $82M for Broker’s Excessive Trading on ThinkAdvisor.