- Citigroup Global Markets is being fined $US1.25 million by FINRA for lax background checks.
- The firm’s failure to properly fingerprint and background non-registered associates led it to hire three convicted criminals.
- The individuals should have been immediately disqualified, but slipped through the cracks because of the faulty background check process.
- Read more on Markets Insider.
FINRA announced today that it has fined Citigroup Global Markets $US1.25 million for its failure to conduct timely or adequate background checks – an oversight that led it to hire three convicted criminals.
The Citigroup unit’s shortcomings came amid screenings of about 10,400 non-registered individuals associated with the firm over a period of seven years from 2010 to 2017.
Citigroup also didn’t fingerprint at least 520 of those people before they had already started working at the firm, FINRA said in a release. In addition, the firm limited its background check screening to only include what is required by federal banking laws, leaving out what’s required by federal securities laws.
The years of poor practices led the group to hire the three people who should have been immediately disqualified, FINRA said.
“Member firms must live up to their responsibility as a gatekeeper protecting investors from bad actors,” said Susan Schroeder, the executive vice president of FINRA’s department of 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.”
The FINRA release said that, as part of the settlement, Citigroup Global Markets “neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.”
In an email to Markets Insider, a Citigroup spokesperson wrote: “Our comment is that we are pleased to have this matter resolved.”
The news comes a week after Citigroup reported strong second-quarter results that beat analyst expectations and led a rally in bank stocks. Shares of Citigroup were little changed after FINRA announced the fine, and are up about 38% year to date.
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