Citigroup Allegedly Failed to Properly Supervise and Send Prospectuses for 255,000 Sales of ETFs

investment fraud attorneyFrom 2009 until April 2011, Citigroup allegedly failed to deliver prospectuses in connection with sales of certain ETFs to customers, and that just between September 2010 and November 2010 alone, Citigroup failed to deliver prospectuses for approximately 255,000 customer purchases regarding approximately 160 ETFs, according to a recent FINRA Letter of Acceptance, Waiver and Consent (AWC).

This was not Citigroup’s first violation of this nature, as the firm was previously sanctioned by the NYSE in 2007 for failure to deliver ETF prospectuses, the AWC further alleges. This time, however, according to FINRA, Citigroup self-reported the ETF prospectus delivery failure to FINRA in January 2011.

Citigroup Fined $3 Million for Failure to Maintain and Enforce Supervisory Control Policies

As a result of the aforementioned activity, Citigroup allegedly violated provisions of the Securities Act of 1933 and thereby violated FINRA Rules, the AWC notes.

In review, Citigroup’s approach to testing and verification and its related controls were not reasonable in light of its previous failures in the area of ETF prospectus delivery, and violated NASD and FINRA Rules by failing to establish, maintain and enforce a system of supervisory controls to verify that its ETF prospectus delivery procedures were reasonably designed to comply with the applicable laws, rules and regulations, the AWC notes.

As a result, the FINRA AWC reports, Citigroup has agreed to an act of censure, and to pay a fine in the total amount of $3,000,000.

Investment Rights Lawyers Investigating

The Peiffer Rosca Wolf investment rights lawyers often represent investors who lose money as a result of investment misconduct. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.

Investors who believe they lost money as a result of investment misconduct may contact the investment rights lawyers at Peiffer Rosca Wolf, Alan Rosca or Joe Peiffer, for a free, no-obligation evaluation of their recovery options, at 888-998-0520.

Alan Rosca (1169 Posts)

Alan is a securities lawyer. He also teaches Securities Regulation at the Cleveland-Marshall College of Law. He focuses his legal practice on complex commercial and financial litigation and arbitration, particularly in the areas of securities and investment fraud. His office is in Cleveland, Ohio.


In our legal system, every person is innocent until and unless found guilty by a court of law or a tribunal. Whenever we reference “allegations” or charges that are “alleged,” such allegations or charges have not been proven, and are merely accusations, not findings of fault, as of the date of the blog. We do not have, nor do we undertake, a duty to continue to monitor or follow cases about which we report, and/or to publish subsequent blogs regarding various developments that may occur in such cases. Readers are encouraged to conduct their own research regarding any such cases and any developments that may or may not have occurred in such cases.