REUTERS Lucas Jackson File Photo
HONG KONG, Jan 28, Reuters -- Hong Kong's market regulators have fined a Citigroup C.N subsidiary HK $348.25 million $45 million for misconduct in its cash equities business, and is launching disciplinary proceedings against some former managers at the bank.
The Securities and Futures Commission SFC said on Friday that some of the CGMAL trading desks of Citigroup Global Markets Asia Limited had misrepresented customers and issued inaccurate indications of interest in stocks to generate client inquiries.
The SFC said senior CGMAL managers had attended a roundtable with the watchdog in 2014, during which they drew attention to common deficiencies found in the market, and that it had also issued a circular in 2018 providing further guidance.
The SFC said that CGMAL had failed to identify the misconduct and rectify its failures despite both of these efforts.
In due course, it would start disciplinary proceedings against the former members of the bank's senior management that it considered responsible for CGMAL's misconduct. It didn't say how many people were involved, nor how many people were involved.
In February of 2019, Reuters reported that Citi had fired eight bankers and suspended three from its equities trading desk in Hong Kong after an internal investigation revealed misconduct in their dealings with clients.
SFC Chief Executive Ashley Alder said in a statement that CGMAL's failures exposed a culture that encouraged chasing revenue at the expense of basic standards of honesty.
In response to unrelenting commercial pressure to solicit more business and increase CGMAL's market share, deceptive practices were deployed at the expense of the client's best interest and to the detriment of market integrity, Alder said.
A Citi spokesman said the bank had held more than 400 client conversations to keep them informed, rebuild relationships and describe enhanced controls adopted by Citi. He said most, if not all, had resumed their business relationship with Citi.
This resolved an issue that relates to Citigroup Global Markets Asia Limited activities from 2018 onwards. He said in an emailed statement that we fully cooperated with the SFC's investigation and have implemented significant remedial measures to strengthen our compliance and internal controls.